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Full text of "Industrial insurance in the United States"

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INDUSTRIAL INSURANCE 
IN THE UNITED STATES 



INDUSTRIAL INSURANCE 
IN THE UNITED STATES 



BY 

CHARLES RICHMOND HENDERSON 




UNIVERSITY 

OF 



CHICAGO 
THE UNIVERSITY OF CHICAGO PRESS 

LONDON 

T. FISHER UNWIN, 1 ADELPHI TERRACE 
1909 



COPTEIGHT 1908 B? 

THE UNIVERSITY or CHICAGO 



Published January 1909 



Printed By 

The University of Chicago Press 
Chicago, Illinois, U. S. A. 



PREFACE 

The present volume is substantially an English version of 
Die Arbeiter-Versicherung in den Vereinigten Stoat en von 
Nord- America. 1 Considerable new material has been added; 
but the movement is now so rapid that before proofs can be 
read new and important events may occur. In preparing 
this volume the statistics used have been compared, as far 
as possible, with the primary sources. It is difficult to avoid 
errors, and the author will be grateful for corrections. 

The summary of European laws is added in order to 
indicate the various tendencies of thought and activity in 
this field. Imitation of foreign measures is impossible, but 
each scheme may suggest a new starting-point for American 
legislation. In the Appendix will be found the regulations 
of several important schemes of insurance which have been 
drawn up by actuaries, with the best legal and business 
advice. Some of these plans have already endured severe 
tests in practice. 

1 Published by A. Troschel, Berlin, 1907, as Heft XVII of Dr. 

Zacher's Die Arbeiter-Versicherung im Auslande. The publisher and 
editor of that series graciously gave permission to publish an English 
edition. 



189788 



SPREGKELS 



TABLE OF CONTENTS 

PAGE 

SUMMARY OF EUROPEAN LAWS ON INDUSTRIAL INSURANCE . . i 

CHAPTER I. THE EXTENT AND NATURE OF THE DEMAND FOR A 
SOCIAL POLICY OF INDUSTRIAL INSURANCE IN THE UNITED 

STATES 41 

CHAPTER II. LOCAL RELIEF SOCIETIES ...... 63 

CHAPTER III. BENEFIT FEATURES OF THE TRADE UNIONS . . 84 

CHAPTER IV. THE INSURANCE OF THE FRATERNAL SOCIETIES . 112 

CHAPTER V. THE EMPLOYERS' LIABILITY LAW . . . . 128 *- 

CHAPTER VI. PRIVATE INSURANCE COMPANIES: " INDUSTRIAL 

INSURANCE" AND "CASUALTY" COMPANIES .... 149 

CHAPTER VII. FIRMS AND CORPORATIONS 190 

CHAPTER VIII. INSURANCE PLANS OF RAILWAY CORPORATIONS . 212 

CHAPTER IX. MUNICIPAL PENSION SYSTEMS AND PENSIONS FOR 

TEACHERS 251 

CHAPTER X. THE PENSION SYSTEMS OF THE UNION AND OF THE 

SEVERAL STATES 273 

CHAPTER XI. PROTECTIVE LEGISLATION 288 

CHAPTER XII. SURVEY AND OUTLOOK 307 

APPENDIX A. BIBLIOGRAPHY 323 

APPENDIX B. COMMON CARRIERS' LAW (FEDERAL) . . . 32.7 

APPENDIX C. FEDERAL COMPENSATION LAW 330 

APPENDIX D. ILLINOIS BILL 333 

APPENDIX E. CASUALTY COMPANY CONTRACTS .... 339 
APPENDIX F. AGREEMENT OF LARGE FIRMS . . . . . -345 

APPENDIX G. SWIFT & Co. PLAN 355 

APPENDIX H. INTERNATIONAL HARVESTER COMPANY PLAN . . 377 

APPENDIX J. MODEL CONSTITUTION AND BY-LAWS FOR MUTUAL 

BENEFIT ASSOCIATIONS 395 

vii 



TABLE OF CONTENTS viii 

PAGE 

APPENDIX K. PLAN OF SCOTTDALE IRON AND STEEL WORKERS' 

ASSOCIATION 402 

APPENDIX L. PLAN OF STUDEBAKER BROS. MFG. Co. . . 410 

APPENDIX M. PLAN OF THE UNIVERSITY OF CHICAGO PRESS 

MUTUAL BENEFIT ASSOCIATION 416 

APPENDIX N. THIRTEENTH BIENNIAL REPORT OF THE BUREAU 

OF LABOR AND INDUSTRIAL STATISTICS (1908) .... 423 

APPENDIX O. LAWS OF MASSACHUSETTS, 1908, chap. 489 . . 428 







SUMMARY OF EUROPEAN LAWS ON INDUS- 
TRIAL INSURANCE 1 

The book of Willoughby on Workingmen's Insurance 
represented the situation in Europe and America up to 1898, 
Since then great progress has been made, and it is desirable 
to give a brief sketch of the essential facts in relation to 
existing systems. 2 

GERMANY 

In Germany there are two forms of sickness insurance of 
workingmen, compulsory and optional. According to the 
imperial law of 1883, with its subsequent amendments up to 
1903, all workmen and employees with an annual income 
up to 2000 marks ($480), engaged in manufactures or 
trade, must be insured. By special regulations this require- 
ment may be extended to agriculture and household indus- 
tries. Many employees in excepted classes are permitted 
to insure themselves who are not required to do so. In the 
year 1906 the German Empire had sixty-one and two-tenths 
million inhabitants, of whom fifteen and four-tenths million 
were wage earners. For these there were 22,940 funds or 
insurance associations, with twelve and four-tenths million 
members; $72,240,000 premiums paid, or $5.76 per person 
insured; $63,840,000 were paid out, or $13.20 per sick per- 
son and $.67 per day of sickness. The form of insurance is 
the local insurance association based on the principles of 
mutual help and self-government, under the general law. 

1 This summary, prepared for Charities and the Commons, is repro- 
duced here by permission of the editors with some additions. 

2 1 have used chiefly Zacher, Leitfaden zur Arbeiterversicherung, 
1908, and the report of the International Workingmen's Insurance Congress 
of Vienna, 1905, and of Rome, 1908. 



2 INDUSTRIAL INSURANCE 

In these local associations the workmen pay two-thirds of 
the premiums and the employers one-third of the premiums, 
which are based on the rate of wages. There are also free 
associations for insurance in which the employers have no 
share. 

The benefits received under the law are: (a) Free treat- 
ment and sickness money (50 per cent, of the average 
wages) ; or, free treatment in a hospital and one-half the 
sickness money paid to dependent relatives for twenty-six 
weeks; (b) lying-in women receive at the same rate during 
six weeks; (c) death benefit of twenty times the wage of 
one day. The indemnities seem small when given in Ameri- 
can money ; their actual value in Europe is much higher than 
the amounts appear to offer. By special enactments this 
minimum scale of benefits may be raised. In case of dispute 
the matter is settled by a supervisory board without costs 
for litigation. 

Accident insurance was introduced in Germany by the 
law of 1884-87, revised in 1900. Insurance is compulsory 
for all workmen and foremen with annual earnings under 
3,000 marks ($720), in manufactures and agriculture. By 
special enactment it may be extended to foremen and petty 
employers with more than 3,000 marks ($720). Employers 
and other persons not required to insure are permitted to 
insure themselves under the same scheme. If an accident 
has been wilfully caused by the employer he can be sued 
criminally under the old liability law of 1871 and obliged to 
pay the indemnity fixed by that law, less the amount paid 
by his insurance association. Such suits are rare, as the 
process is long and doubtful and the ordinary insurance is 
adequate and easily collected without suit. Employers are 
permitted to insure themselves in their own associations 
against this liability. The insurance is effected by means of 
insurance associations of employers (of which there were, 'in 



LAWS ON INDUSTRIAL INSURANCE 3 

1906, 114 having 5,400,000 establishments and 19,200,000 
workmen) in the same or similar trades, organized on the 
principles of mutuality and self-government. There are 
special organizations for those engaged in the state service, 
railroads, telephones, etc. The premiums are paid by assess- 
ments on the employers levied according to the total wages 
paid and the scale of risk in the trade and establishment. 
This arrangement makes it to the interest of individual em- 
ployers to guard against accidental injuries. They hardly 
need factory inspectors to keep them to this duty. The 
benefits offered under this law are: (a) The benefit begins 
after the sickness insurance stops, but in any case not later 
than the fourteenth week of incapacity; free treatment and 
accident benefit up to 66% per cent, of the average annual 
earnings, or free hospital treatment together with pension to 
dependent relatives, up to 60 per cent, of earnings; (b) 
death benefit of twenty times the daily wages and pension to 
dependent relatives up to 60 per cent, of daily wages. Bene- 
fits are paid in case of any sort of accident without litigation 
over questions of "negligence" of employee, unless the in- 
jured person has purposely brought the injury on himself. 
In case of controversy the dispute is settled without expense 
to the parties by an arbitration court and by the imperial 
insurance authorities, the workmen and employers being 
equally represented. Premiums paid in 1906 were $40,- 
080,000; average, $2.18 per insured. Expenditures, $34,- 
368,000 to 854,680 injured, and to 73,999 widows, 103,564 
children, 3,882 parents of those killed. 

Invalid arjLdjQ_ld-a^_rjejisiojis_were introduced in Germany 
by the law of 1889, improved in 1899. All wage earners 
with annual earnings less than $480 are required to be in- 
sured, and the imperial council can extend this insurance to 
petty employers and persons in household industry. Pro- 
vision is also made for optional insurance of workmen and/ 



4 INDUSTRIAL INSURANCE 

petty employers not included in the compulsory clause. The 
invalid pension insurance is effected through organizations 
covering different territories and these also are mutual in 
character and self-governing under the general law. Spe- 
cial funds are erected for miners and state railway 
employees. The premiums are paid by employers and em- 
ployees, one-half each, and the empire adds $12 annually to 
each pension paid. The benefits paid are: (a) Invalid 
pensions for persons incapacitated for labor, after they have 
paid premiums for 200 weeks; (b) old-age pensions for 
members over. seventy years of age, after paying premiums 
1,200 weeks; (c) free treatment in addition to aid to de- 
pendent relatives, in order to prevent incapacity for work; 
(d) repayment of premiums in case of death, accident, or 
marriage, if the pension has not yet fallen due. In case of 
controversy the dispute is settled, without cost to the parties, 
before an arbitration court and the imperial insurance 
bureau, both workmen and employers having their repre- 
sentatives. The statistics of 1906 showed that there were 
forty invalid pension organizations, with fourteen and one- 
tenth million insured members. The premiums paid were 
$40,800,000 $2.88 per member and $39,840,000 were 
paid in pensions, the average invalid pension being $39.12 
and the old-age pension $38.64, varying in amount with the 
wage class. Out of fifteen million, four hundred thousand 
workmen, fourteen and one-tenth millions were insured. 

Already Germany is working out laws and plans for 
securing income to widows and orphans and for the unem- 
ployed. Unquestionably Germany leads the world in indus- 
trial insurance, and has prospered while she built up the 
system, probably largely in consequence of it. 

Before 1881 Germany depended upon employers' liability 
laws, voluntary benefit societies, and private casualty com- 
panies for the protection of her workingmen against beggary 



LAWS ON INDUSTRIAL INSURANCE 5 

in times of disability. When the workingmen become 
conscious of their wrongs and united in a desperate effort to 
overthrow a government which seemed indifferent to their 
sufferings and hostile to their aspirations, they were held for 
a time in subjection by the iron hand of Bismarck, under the 
anti-socialistic laws which sought to suppress discussion. It 
became evident that this would eventually provoke open re- 
bellion and revolution. The most objectionable laws were 
repealed and in their stead a national policy, based on the 
duty of a people to care for all its citizens, was announced. 
On November 17, 1881, Emperor William I, by the hand of 
Prince Bismarck, sent to the Reichstag his famous message : 

We regard it as our imperial duty once more to lay upon the heart 
of the Reichstag the promotion of the welfare of the workmen, and 
we would look back with all the more satisfaction on all the successes 
with which God has visibly blessed our reign, if we might carry with 
us the consciousness that we could leave behind us new and permanent 
assurance of inward peace and to those who need help greater security 
and comfort to which they have a claim. In our efforts directed to 
that end we are sure of the co-operation of all the federate states and 
we look for the support of the Reichstag without regard to parties. 
First of all to this end a sketch of a law relating to the insurance of 
workmen against loss by accidents in industry has been prepared. By 
its side and supplementing it will be offered a method of organizing 
sickness insurance funds. But also those who by reason of age or 
disability have become unable to earn a living have a well founded 
claim upon the community for a larger measure of state care than has 
hitherto been given them. To find the right way and means for this 
care is a difficult task, but also one of the highest duties of every state 
which rests upon the Christian life of the people. The close union 
of the real forces of this people's life with incorporated societies under 
state protection and state help, will, as we hope, make possible the 
solution of problems for which the power of the government alone 
would not in the same degree be adequate. 

On February 19, 1907, Emperor William II, in his 
throne speech before the newly elected Reichstag confirmed 
the policy of his grandfather, saying : 



6 INDUSTRIAL INSURANCE 

That legislation rests upon the principle of social duty to the 
working classes and is therefore independent of parties. The federated 
states are firmly decided to carry out this social work in the exalted 
spirit of Emperor William the Great. 

With these decisions all parties in Germany are now 
agreed after a trial of nearly a generation; and this unity of 
purpose has been attained, in spite of early misgivings and 
antagonisms, because of the manifest advantages of the 
system. Some of these advantages and benefits we may 
briefly summarize. 

It is sometimes asserted in advance of proof that 
accident, sickness, and old-age insurance is a burden upon 
the capital, industry, and commerce of a nation. As Ger- 
many is the country which annually does more than other 
nations in this direction it seems not unfair to mention the 
fact that the years of trial of her system of insurance have 
been precisely the years in which that nation has forged to 
the front rank in the world of manufactures and commerce. 
The nation has grown rich and the workingmen have im- 
proved their condition so that they are not anxious to emi- 
grate as formerly. On all these points we have several 
recent publications which reveal the situation with a wealth 
of statistical evidence. 3 

Wages have risen more rapidly than in any other coun- 
try ; the insurance premiums, so far as paid by the employers, 
are a clear addition to wages ; in times of sickness, disability 
from accident or old age, the workman has a legal right to 
honorable maintenance, and so the degradation of charity is 
avoided; the cost of accident insurance premiums makes it 
to the direct and manifest interest of employers to use all 
possible protective devices to prevent injuries and diseases; 
the administration of the sickness and invalid funds takes 

3 W. J. Ashley, Progress of the German Working Classes; W. H. 
Dawson, The German Workman (1906). 



LAWS ON INDUSTRIAL INSURANCE 7 

care to provide means of speedy and 'effective cure of 
invalids; the committees of administration bring employers 
and workmen together under conditions favorable to social 
conciliation; and in every direction the system seems to have 
promoted civilization and the common welfare. The defects 
in details are carefully studied by the leading men of the 
empire and will gradually be corrected ; the methods will be 
unified and simplified; and in the near future the benefits 
will include larger pensions to widows and orphans and 
some kind of protection to the temporarily unemployed. 

It is sometimes asserted that the German system of 
workingmen's insurance is nothing better than a disguised 
form of poor relief, a kind of gift from above paid by the 
government at the expense of taxpayers to prevent rebellion 
of the "lower classes." The classic message of the emperor 
gives a more just interpretation of the purpose of the 
"social policy" of the nation. The demand is made on the 
basis of the duty of the people and the common welfare, 
because health, security and freedom from dependence are 
not a mere class interest but belong of right to all. Those 
who risk the greatest danger to life and limb should not be 
left to carry the entire cost of that hazard. 

Insurance is not poor relief but common justice, a 
method of fairly distributing the extraordinary costs of 
civilization. Since such insurance never has been made 
general and never can be made general by any voluntary 
scheme, the government, the agent of the common intelli- 
gence, conscience and will, intervenes far enough to enforce 
obligation, to regulate the method and to insure the rights 
of all concerned. Thus in the United States the govern- 
ment, under the right of eminent domain, takes landed 
property for a consideration and gives it to railroads for 
right of way or as subsidy; and in turn prescribes the terms 
on which a railway corporation can enjoy these special 



8 INDUSTRIAL INSURANCE 

privileges. Thus also the federal government grants privi- 
leges to certain ' banks and controls the method of their 
administration. In Germany the government seeks in its 
insurance laws to encourage and stimulate the interest of 
both the employers and employees in the system. The entire 
system is based on the principles of mutual benefit, self- 
government and local initiative. Both employers and em- 
ployees have a right to participate in the administration and 
judicial application of the law, as both share equitably in 
the cost. It is not state insurance, but insurance on the 
basis of mutuality and self-government, under the regulation 
of law. It is precisely in this administration that the work- 
ingmen feel themselves to be free agents and intelligent 
participants in the affairs of their country. There is no 
taint of charity from first to last; each man pays his share 
of the cost, has a voice in the control and can set up a legal 
claim when he needs his benefits. All this removes the in- 
surance system by the diameter of the moral world from 
poor relief and private charity. 

The German system does not make other forms of 
protection superfluous, since it simply provides for the 
necessities of existence; it does not remove the motive for 
forming trade unions and fraternal societies, nor for invest- 
ing in extra insurance in life insurance companies, nor for 
savings. All these organizations of thrift flourish in Ger- 
many. 

That an obligatory or compulsory law is necessary to 
bring the benefits of insurance within the reach of those 
who most need them is evident in the fact that Germany, 
before 1883, had developed its voluntary associations for 
sick benefits in a very remarkable way, and yet scarcely half 
those who were in need had any share in the system. Since 
the law of 1883 all wage earners are protected. So also in 
case of accidents. The German law, before 1871, was quite 



LAWS ON INDUSTRIAL INSURANCE 9 

as strong as ours, yet scarcely one-tenth of -all injured work- 
men were protected. 

The exposition at St. Louis, in 1904, brought together 
under one roof the exhibits of social economy of the great 
nations. No one could fail to observe the pronounced su- 
periority of Germany in this section. There were indeed 
exhibits made by American employers which reflected credit 
upon them for their individual interest in their men ; but all 
these were instances of exceptional goodness or of enlight- 
ened self-interest. The mines showed some of the best 
machinery for getting out coal and ore, but only inferior 
devices for protecting the life and health of the men. The 
display of the United States was marked rather by confusion 
and anarchy than by unity, order, and law. Every man 
was a law unto himself; there was no organic system, no 
universal principle of action, no statistics which revealed 
equity to all. 4 American workmen do indeed have some- 
what higher money wages than German workmen ; but their 
expenses are higher, their labor is more intense, and when 
accident, sickness, or old age overtakes them they have no 
security of support save charity or public relief. 

The German insurance system has already developed out 
of its curative measures a whole system of prevention of 
accidents, diseases and premature invalidism. The power- 
ful and closely knit organization, with its immense funds on 
hand, invests money to reduce the cost of insurance and 
restore the workingmen as speedily as possible to the ranks 
of producers; Since the first factor in production is the 
healthy and vigorous laborer this expenditure is a wise 
investment and brings to the nation a high rate of interest. 
The whole educational influence of the insurance system is 

* See Amtl. Bericht des deutschen Reichskomissars filr die Welt- 
Ausstellung in St. Louis, 1904, Berlin, 1906, pp. 516-518; cited also by 
Dr. Zacher, in Vorwort zum Band IV, Die Arbeiterversicherung im Aus- 
lande, p. 35. 



10 INDUSTRIAL INSURANCE 

directed to diminish the frequency of accidents and sickness, 
to combat preventable diseases like tuberculosis, alcoholism, 
and venereal disorders, and to improve the conditions of the 
habitations of the wage earners and their families. All this 
grows naturally and inevitably out of compulsory insurance 
and cannot in anything like the same degree arise under a 
voluntary system dependent on individual caprice, and 
without legal foundation. 

The better word for "compulsory" insurance is "legal" 
or "obligatory," or "legally obligatory," for the word "com- 
pulsion" is misleading. No insurance law can be enacted 
by the legislation of a free people and successfully enforced 
against the selfishness of exceptional individuals until it has 
first been accepted by the reason, the conscience and the 
choice of that people, whether of a commonwealth or a 
nation. When a law .is thus the expression of a deliberate 
social policy, accepted after investigation and discussion, 
it is an act of social co-operation on the part of the entire 
community. It becomes legally obligatory on all in order 
that the small minority of egoists may not defeat the will 
of the people, in order that all competitors may be placed on 
a common level, in order that duties and benefits may be 
accurately defined, in order that costs of performance of 
duties may be calculated in advance and adequately provided 
for in budgets of individuals, corporations, and political 
organizations. 

Our system of "free" schools is felt to be "compulsory" 
only when a taxpayer is exceptionally stupid or selfish. Our 
taxation for roads, bridges, lighting of streets, water works, 
police, public sanitation is not felt as compulsion by the 
ordinary normal citizen who knows that for every dollar 
he contributes according to law and in the ratio of his ability 
the community of which he forms a part will enjoy a corres- 
ponding advantage. 



LAWS ON INDUSTRIAL INSURANCE II 

TABLE OF GERMAN INSURANCE 

Sickness Insurance (since 1885}: Marks 

Sickness payments 1,114,629,489= $267,500,077. 36 

Physicians 514,803,920= 123,552,940.80 

Medicines, etc 402,757,651= 96,661,836.24 

Hospitals 303,061,148= 72,734,675.52 

Death benefits 83,763,839= 20,103,321 . 36 

Lying-in-women 3 6 ,543, 6 7 2 = 8,770,481 . 28 

Various benefits 38,414,074= 9,219,377 . 76 

1888-1904 2 ,493,973,793=%98,553,7 I -3 2 

1905 250,000,000= 60,000,000 . oo 

In round numbers (1905) 2, 744,000, 000= $65 8,560,000 .00 

" " " (1907) 3,298,000,000= 790,520,000.00 

Accident Insurance (since 1885): Marks 

Accident benefits 759,1 72,928=$i82,2oi,502 . 72 

Payments to dependents of deceased .. 191, 777,559= 46,026,614.16 

Medical care 34,275,716= 8,226,171.84 

Hospitals 55, IO >333= i3> 202 >479 -9 2 

Death benefits 6,927,990= 1,662,717.60 

Widows 7,747,570= 1,859,416.80 

Foreigners 2,846,489= 683,157 .36 

1885-1904 i,o57,758,585=$253,862,o6o.4o 

1905 ..- 136,000,000= 32,640,000.00 

In round numbers i,i94,ooo,ooo=$286,56o,ooo.oo 

" (1907) 1,488,000,000= 359,120,000 .00 

Invalid and old-age pensions (since i8pi): Marks 

Invalid pensions 560,486,961 =$134,516,870. 64 

Old-age pensions 336,47 2 ,378= 80,753,370.72 

Medical care 55,37 I ,747= *3,389, 2I 9- 2 8 

Return of premiums (a) at marriage. . 38,025,117= 9,126,028.08 

Return of premiums (ft) at death 13,422,508= 3,221,401 .92 

Return of premiums (c) at accident... 171,201= 41,088.24 

1891-1904 1,003,949,91 2 =$240,947,878. 88 

1905 162,000,000= 38,880,000.00 

In round numbers i,i66,ooo,ooo=$279,84o,ooo .00 

(1907) 1,500,000,000= 360,000,000.00 



12 INDUSTRIAL INSURANCE 

If the German people really felt that their insurance laws 
were "compulsory" in the sense of being oppressive, injuri- 
ous or excessively costly, those laws would at once be 
abrogated ; for the German people are among the most free, 
politically, on earth, and have an imperial legislature whose 
members are elected by universal manhood suffrage. It is 
only our national vanity which makes us think of Germans 
as being under an absolutist and oppressive government. 

At the end of 1907 in all about eighty-one million per- 
sons (sick, injured, invalids and their dependents) had 
received six and three-tenths billion marks ($1,512,000,000) 
in benefits. The workmen have contributed less than half the 
premiums and have received two billion marks ($480,000,- 
ooo) more than they have paid out. Property is owned to 
the amount of 2,000,000,000 marks ($480,000,000), of 
which almost 624,000,000 marks ($149,760,000) have been 
invested in workmen's dwellings, hospitals and convalescent 
houses, sanatoriums, baths, and similar institutions of wel- 
fare. 5 

AUSTRIA 

The Austrian system resembles the German but differs 
in important particulars and is not so fully developed. 

Sickness insurance is compulsory for workmen and fore- 
men in manufactures, and optional with employees in agri- 
culture and household industries (law of 1888). Insurance 
is effected by means of local sick insurance associations on 
a basis of mutuality and self-government. The premiums 
are paid two-thirds by workmen and one-third by employers 
in percentage of wages. The benefits afforded are free 
treatment and sickness pension, or free hospital treatment 
and benefits to dependent relatives. The period of relief 
is twenty weeks, and the benefits are not to exceed 60 per 

6 From Zacher, Leitfaden zur Arbeit erversicherung des Deutschen 
Reiches, 1908. 



LAWS ON INDUSTRIAL INSURANCE 13 

cent, of the locally customary wages. The death benefit is 
twenty times a day's wages. An arbitration court decides 
disputes without cost. Contrast this feature of the German 
and Austrian laws with the tedious, bitter and costly suits 
for damages in negligence cases in the United States ! 

The Austrian statistics for 1905 showed twenty-seven 
and three-tenths million inhabitants of whom ten million 
were wage earners. There were 2,934 insurance associa- 
tions, with two and eight-tenths million members. The 
premiums were forty-eight million marks ($11,520,000), 
average of 16.2 marks ($4.05), and the expenditures forty- 
three and seven-tenths million marks ($10,488,000) or 
37.5 marks ($9.00) per insured person and 1.70 marks 
($.40) per day of sickness. 

Accident insurance is compulsory (laws of 1887, 1894) 
for workmen and foremen in manufactures with annual 
earnings less than 2,000 marks ($480), and this includes 
agricultural workmen when inanimate power is applied to 
farm machinery. Employers and workmen not obliged to 
insure, are permitted to insure themselves in the same funds, 
if the income does not exceed 2,000 marks ($480) wages 
per year. The Austrian system includes all the industries of 
a given territory in an insurance fund; in this it differs 
from the German system, under which the associations are 
composed of employers of the same industry, without re- 
gard to their territory; the Austrian railway funds, how- 
ever, are naturally organized by trades. In another respect 
the Austrian system differs from the German; for the 
premiums are paid into a fund (Kapitaldeckung) , whereas 
the German law provides for assessments. In Austria the 
employers pay 90 per cent, and the employees 10 per cent 
of the cost, while in Germany the employers pay all. The 
rates vary with wages and degree of trade risk. The 
benefits are pension (up to 60 per cent, of wages) after the 



14 INDUSTRIAL INSURANCE 

fifth week; pension to the dependent relatives of a dead 
workman, up to 50 per cent, of wages, and death benefit 
up to 42 marks ($10.08). All accidents are indemnified, 
as in Germany, without need to prove negligence. Arbitra- 
tion courts settle disputed cases without cost. In 1905 there 
were seven territorial accident insurance funds, with 408,622 
establishments insuring two and eight-tenths million work- 
men. The premiums paid were twenty-eight and eight- 
tenths million marks ($6,912,000), (10.3 marks, $2.47 
per insured), and nineteen and two-tenths million marks 
($4,608,000) were paid out to 62,968 injured employees 
(having 7,475 widows, 10,247 children, 806 parents). 
Austria has no general old-age pension law as yet, but the 
movement to establish one, carried on since 1891, promises 
speedy relief. In 1889 a law made old-age pensions for 
miners obligatory, and this includes about 150,000 men. 
The employers pay half of the premiums and the employees 
half. The invalid pension is on the average 200 marks 
($48) for full benefit and 146 marks for others; widows 
and orphans may claim a pension up to three-quarters the 
rate first named. Arbitration courts settle disputes. 

HUNGARY 

This interesting country whose intelligent people know 
much of the United States and are ambitious to be in the 
front rank of enlightened peoples, is working out a system 
of industrial insurance of its own. By the law of 1907 
sickness insurance was made compulsory for all employees 
in manufactures, whose earnings do not exceed 2,000 marks 
($480) annually; and was left optional with employees in 
agriculture, household industry and others not included in 
the compulsory clauses. The organization is by local sick 
clubs, as in Germany and Austria, and the premiums, based 
on rate of wages are paid one-half by employees and one- 



LAWS ON INDUSTRIAL INSURANCE 15 

half by employers. The benefits are free treatment and 
sick benefits (50 per cent, of wages and not over 60 per 
cent, of daily wages) during twenty weeks. Disputes over 
claims are determined by arbitration courts and by the insur- 
ance bureau. According to the statistics of 1906, Hungary 
had twenty and five-tenths million inhabitants, of whom 
three and two-tenths million were wage earners. There 
were 440 funds, with 800,000 members. The premiums 
paid amounted to eleven million marks ($2,640,000), (12.8 
marks, $3.07 per insured), and the expenditures nine and 
one-half million marks ($2,280,000), (37 marks, $8.88, per 
sick person and 2.20 marks, $.53 per day of illness). In 1907 
a compulsory accident insurance law was passed similar to 
the German law; but giving only 60 per cent, of wages, 
after 1 1 weeks of disability, and no indemnity for less than 
10 per cent, loss of wages. The Hungarian miners enjoy a 
compulsory invalid and old-age pension law (since 1854), 
with about ninety-five thousand members. In 1902 the in- 
valid pension was 250 marks ($60), the widow's pension 
105 marks ($25.20), and the orphan pension 29 marks 
($6.96), per year. Agricultural employees have a voluntary 
pension system. 

ITALY 

Sickness insurance was brought under the law of 1886, 
and is a voluntary system for wage earners in all occupa- 
tions. The insurance associations are registered and free, 
mutual aid societies with and without legal privileges. The 
state contributes subsidies under certain conditions, usually 
sickness and death benefits, and not medical or hospital 
treatment. Out of thirty-three million inhabitants (1905), 
ten million were wage earners; and of these one million 
members were organized in 6,535 societies; seven and one- 
half million marks ($1,800,000) were paid in premiums 
(7.5 marks, $1.80 per member), and four million marks 



16 INDUSTRIAL INSURANCE 

($960,000), (4 marks, $.96 per member), were paid out 
in benefits. 

The law of 1898 and 1904 makes accident insurance 
compulsory for workmen and foremen with annual earn- 
ings up to 1,700 marks ($408) ; employees in manufactures 
and in agriculture, where motor power is used, are included. 
The employers are permitted to guarantee the insurance of 
their workmen in either of three ways in a state fund, in 
a mutual insurance association of employers, or in commer- 
cial insurance companies. The employers pay all premiums. 
Benefits paid are : (a) To employees incapacitated for labor 
by injuries, indemnities up to 50 per cent, of the wage rates; 
(&) for invalided employees, a lump payment up to six 
times the wages of a year, or a pension; (c) for dependent 
relatives, five times a year's wages in a lump payment; 
(d) aid in emergency. All accidents require indemnity, no 
matter what the cause, as in Germany. Industrial courts 
decide most cases (under 160 marks, $38.40) , and ordinary 
courts, at reduced fees, determine the cases involving larger 
sums. 

Voluntary invalid and old-age pensions are regulated by 
laws (of 1898, 1901, 1907), in a system open to all wage 
earners and governed by the state. Premiums of 5 ($1.20) 
to 80 marks ($19.20) annually are paid by the insured and 
the state adds by way of subsidy 10 marks ($2.40) or more 
per head to the pension. The benefits paid are : For persons 
incapacitated for labor, after contributing five years; old- 
age pensions to all over sixty years who have paid premiums 
twenty-five years at rate of $24 per year at least ; and in case 
of death before pension begins all premiums are to be repaid. 

FRANCE 

Sickness insurance (laws of 1850, 1898) includes work- 
men of all occupations. There are, as in Italy, two forms 



LAWS ON INDUSTRIAL INSURANCE 17 

of benefit associations, free and registered, the former not 
enjoying certain legal advantages granted the latter. The 
state aids the associations by adding subsidies to their sick 
and death benefits. The sickness insurance of miners with 
less than $480 annual earnings was made compulsory by 
law in 1894; and these have 199 funds and two hundred 
and five thousand members, the state granting subsidies. 
According to statistics of 1904 France had thirty-nine 
million inhabitants, of whom nine and five-tenths million 
were wage earners, among whom there were 17,182 benefit 
associations with a membership of three million, five hun- 
dred thousand. The premiums paid were $6,480,000 ($1.76 
per insured) ; and $4,480,000 were paid out, $9.60 per 
person incapacitated from sickness, and $.48 per day lost. 

Willoughby, in Workingmeris Insurance, gives the his- 
tory of French industrial insurance up to 1898, but very 
important progress has been made since that time. 

Up to the time of the international workingmen's insur- 
ance congress at Vienna in 1905, the most important law 
was that of April 9, 1898, as modified by the laws of July 
30, 1899, March 22, 1902, March 31, 1905. It has since 
been further amended by the acts of July 12, 1906, and 
July, 1907. These laws are interpreted by various adminis- 
trative decrees and court decisions. 

The law includes in its scope and protection workmen 
engaged in building, factories, workyards, transportation, 
loading and unloading goods, warehouses, mines, quarries, 
manufactures of explosives, and agricultural industries 
where steam, wind, or electric power is used. By the law of 
1906 employees in commercial establishments were added. 
The employer pays the indemnity, if the disability lasts four 
days or more. The older liability law is abrogated, for the 
workman has no other legal protection aside from this law. 



l8 INDUSTRIAL INSURANCE 

Wages above $480 a year are rated at only one-quarter of 
the rates named below. 

The rates of indemnity in case of absolute and permanent 
disablement is two-thirds of the wage rate; for partial and 
permanent disablement, one-half the amount of reduction 
of wages due to the accident as cause ; for temporary disable- 
ment, a daily payment of one-half the wages. In case of 
death the widow receives 20 per cent, of wage rate until she 
marries again, when she receives a lump sum equal to the 
wages of three years and then she loses further claim. 
The fatherless children receive pensions, not to exceed 60 
per cent, of wages, until they are grown. The indemnities 
are payable quarterly and cannot be seized for debt. The 
employer pays for medical care and $20 toward funeral 
expenses. 

Thus far the law merely limits and defines the liability 
of the individual employer, as in the English compensation 
act. Insurance is not directly compulsory, as in Germany, 
but it is encouraged and practically made universal, by the 
following provisions: Employers are released from other 
liabilities on condition that they pay at least one-third the 
insurance premiums in an insurance organization which is 
approved by the government and which guarantees injured 
members medical relief and an indemnity of at least half 
wages. 

To guarantee the payment, punctual and certain, of in- 
demnities the law regulates insurance by collective policies 
in casualty companies or by associations of employers. If 
the employer refuses to insure he must contribute to a state 
fund, so that in case of his insolvency the workman will be 
paid what he has a legal right to expect. 

This law is instructive for us because France is a repub- 
lic, "a free country," where state compulsion is disliked by 
many people, as in the United States. 



LAWS ON INDUSTRIAL INSURANCE 19 

This law secures protection to workmen but leaves em- 
ployers free to choose their own way of meeting their obli- 
gations. It does not give the casualty company the power to 
charge monopoly prices. It prevents employers from being 
ruined by obligation to pay large indemnities which are too 
heavy for their means. 

The employers' associations have been able to keep the 
costs of administration at about 5 per cent, of the total ex- 
penditures ; a remarkably low rate when we consider that the 
expenses in some companies under our American laws 
reach 60 per cent., leaving only 40 per cent, available for 
actual insurance of workmen. The state fund is little used, 
while the employers' mutual associations and the casualty 
companies have rapidly increased their business. Competi- 
tion between these agencies secures approximately just 
rates. The casualty companies seem to be the most ener- 
getic, enterprising, and inventive in the development of the 
system and the extension of its benefits. 

When the accident results from the wilful act of em- 
ployee no benefit is paid and in case of gross fault a limited 
indemnity. Where disputes occur over minor cases, a justice 
of the peace settles the affair, in other matters the ordinary 
courts are involved, but with simple and inexpensive pro- 
cedure. By laws of 1898, 1905 seamen are under a compul- 
sory insurance system administered by the state. Both 
employers and employees contribute to the premiums. Acci- 
dent pensions are paid to the disabled and to the dependent 
of deceased relatives; with a daily benefit for the disabled. 
A commission decides all disputes. 

The invalid and old-age pension system is being im- 
proved, and an important measure awaits financial adjust- 
ment. A voluntary plan, open to all citizens (laws of 1850, 
1886), is administered by the state. In 1904, 278,000 per- 
sons were paid old-age pensions (average of $25.68 each). 



20 INDUSTRIAL INSURANCE 

Premiums are paid by the insured (from $19.20 to $96 
annually). The state pays a subsidy up to one-third the 
pension. The pensions are: (a) old-age pension after the 
fiftieth year of age; (b) invalid pension for those who are 
disabled before that, up to $240 per year; (c) repayment of 
premiums at death before pension begins. Seamen (law 
of 1881) are included in a compulsory system, administered 
by the state. The insured pay premiums and the state adds 
a subsidy; a pension is paid after the fiftieth year; widows 
and orphans receive one-half pension. 

Miners (law of 1894) with less than $480 annual in- 
come have a pension fund to which workmen and employers 
pay one-half each. Pension begins at fifty-fifth year. A 
commission decides controverted cases. 

BELGIUM 

Belgium has 7,300,000 inhabitants of whom 2,100,000 
are counted wage earners. Sickness insurance 6 is organ- 
ized in mutual benefit associations of two kinds, as in 
Italy and France, free and registered, the latter having 
legal privileges corresponding to specified obligations and 
restrictions. The state grants subsidies. Sickness and death 
benefits are paid but not ordinarily medical and hospital 
care. There are (in 1907) 3,330 associations with a mem- 
bership of 400,000. $864,000 were paid in, or $2.16 per 
member on the average; and, $816,000 expended, $8.04 per 
sick person, or an average of $.38 per day of incapacity. 

Belgium has both voluntary and compulsory accident 
insurance, with a tendency to make all compulsory, as it is 
already for miners. According to the laws of 1903, work- 
men and foremen with income of less than $480, in manu- 
factures, trade and agriculture are insured, as in Italy, ac- 
cording to the choice of the employer, either in a state fund, 

^Sickness Insurance Laws of 1851, 1894 ; Statistics of 1904. 



LAWS ON INDUSTRIAL INSURANCE 21 

mutual companies or in casualty companies. The premiums 
are paid by the employer. The benefits are: (a) In case of 
incapacity from accident, daily payment up to 50 per cent, of 
wages; (b) for permanent disability, pension up to 50 per 
cent, of annual wages; (c) dependent relatives up to 30 per 
cent of wages; (d) fee of physician and expenses of burial. 
All accidents from whatever cause bring indemnity. Dis- 
putes are settled by justices of the peace or by a commission 
having summary judicial powers. 

There are about 137,000 miners under a compulsory 
insurance law (of 1868). The insurance is effected through 
benefit associations to which the employers and workmen 
contribute and to which the state and the province give sub- 
sidies. The benefits vary according to the by-laws. Dis- 
putes are settled by a commission. 

The voluntary pension system is available for all citizens. 
The system is based on laws of 1850, 1865, 1900 and 1903. 
The fund is a state fund which in 1906 paid 8,277 pensions, 
on an average of $39.60 each. Premiums paid by the insured 
are from $19.20 to $96 annually, and a state subsidy of one- 
third the pension is added. 

The pensions begin at the fifty-fifth to the sixty-fifth 
year, the amount varying with the age of first payment, up 
to $240 yearly. An invalid pension is paid for those who 
become incapacitated before the pension year arrives; and 
premiums paid at death before the pension begins are repaid 
to the family. 

A compulsory pension system is organized for miners 
(law of 1868), under the form of benefit associations to 
which employers, workmen, state and province contribute. 
Pensions are paid to the disabled after a service of thirty to 
thirty-five years ; and widows and orphans of members are 
granted pensions. A commission decides disputes at mini- 
mum expense. 



22 INDUSTRIAL INSURANCE 

NORWAY 

The system of sickness insurance is voluntary, workmen 
of various occupations having free or registered mutual 
benefit associations. Of 2,300,000 inhabitants, 400,000 are 
wage earners. In 1885 there were 230 funds with 45,000 
members in 1907, 400 funds with 60,000 members. The 
premiums and benefits are regulated by by-laws ; premiums 
are paid by members. The average premiums were $1.86 
and the benefits $1.80 per member and $.30 per sick day. 

Accident insurance was made compulsory by law (1894, 
1906) for workmen and foremen in industries, with annual 
earnings up to $324. The insurance is regulated by a state 
department. Premiums are paid by employers according 
to rates of wages and degree of hazard. The benefits are : 
(a) Free medical treatment and disability payments up to 
60 per cent, of the wages, or free hospital care together with 
payments to dependents up to 50 per cent, of wages from 
the fifth week of disability; (&) death benefit of $7.20 
and payments up to 50 per cent, of wages to dependents of 
deceased. There is no indemnity when the accident results 
from wilful act of workmen or when loss is under 5 per 
cent, of wages. Dispute claims are settled by a commission 
called for the purpose and without costs. 

Norway has no old-age pension system; but there have 
been efforts in this direction since 1890. 

SWEDEN 

Sickness insurance is effected by means of free or regis- 
tered mutual benefit associations, regulated by a law of 1891. 
Of 5,400,000 inhabitants, 1,000,000 are wage earners. In 
1903 there were 1,887 registered associations with 360,173 
members. The premium (paid by members) was $1.62 to 
$2.31, and the benefits $1.86 or $.32 per day of sickness. 
The state subsidizes the associations. 



LAWS ON INDUSTRIAL INSURANCE 23 

Accident insurance is not compulsory, but is regulated by 
a law of 1901, and is extended to workmen and foremen in 
manufactures. The employer has the right to insure either 
in a state fund, or in an employer's association, or in a 
casualty company; and the employer pays the premiums. 
The benefits are (a) Disability payments of $.26 per day 
from the sixty-first day; (b) permanent disability, a pen- 
sion of $80 annually; (c) death benefits of $16 and pay- 
ments to dependents of deceased up to $80. If the accident 
is a result of wilfulness or gross fault, or loss of wages is 
less than 10 per cent., there is no indemnity. Disputes are 
settled before an ordinary court. 

There is no old-age pension system, but efforts have been 
put forth since 1891 to organize such a system. 

DENMARK 

Sickness insurance is voluntary and regulated by a law 
of 1892. Persons of small means in all callings are insured 
in free or registered associations. Of 2,600,000 inhabitants, 
400,000 were wage earners. In 1907 there were 1,452 regis- 
tered associations with 553,000 members. The average 
premiums (paid by members) were $1.92, and the benefits 
$2.54 per member and $.55 per day of sickness. The state 
pays a subsidy. Disputes are settled without cost by an in- 
spector of sickness insurance associations. 

Accident insurance is voluntary for workmen and fore- 
men in manufactures and agriculture (where motors are 
used), where the annual earnings are under $648 (law of 
1898, 1 903); and compulsory for seamen and officers of 
ships (law of 1905). The employers in industries and agri- 
culture may insure in associations of their own organization 
or in casualty companies; there is no state fund for these. 
For the fisher folk a state fund is established. 

Premiums are paid by the employers. In case of the 



24 INDUSTRIAL INSURANCE 

fishermen the premium is $1.34 per insured person, and the 
state pays a subsidy. The benefits in voluntary insurance 
are: (a) Disability, daily payment up to 60 per cent, of 
wages from the fourteenth week; () permanent disability, 
a lump sum up to six times the annual wage ; to the depend- 
ents of a deceased workman, a lump sum of four times a 
year's wages and $12 death benefit. Seamen and officers of 
ships are under the compulsory law of 1905, employers 
pay premiums and have choice between their own associa- 
tions, a state fund, and the casualty companies. No in- 
demnity is paid in case of gross fault of the injured man. 
A workmen's insurance council determines controverted 
questions. 

There is no invalid and old-age pension, but the poor 
law (1891, 1902) is extended so as to secure a pension for 
all indigent persons over sixty years of age. The expense 
is divided equally between state and commune. The pension 
varies with need, averaging $28. The last annual payment 
(1905) was $2,040,000, $30.56 per head. 

FINLAND 

Sickness insurance is regulated by orders of council of 
1897, but is voluntary; premiums and benefits being fixed 
by by-laws. Of 3,000,000 inhabitants, 500,000 were work- 
men. In 1905 there were 177 associations with 40,637 
members; the average premium (paid by members) being 
$2; the benefits $1.68 per member, or $.36 per day of 
sickness. The state adds a subsidy. 

Finland has a compulsory accident insurance law for 
workmen in manufactures (with less than 600 marks=c. 
$150 annual wages, law of 1895), and for seamen since 
1903. In 1906 there were 80,900 insured workmen and 
3,100 insured seamen. The premiums are paid by employ- 
ers either into a state fund, a mutual association or a casualty 



LAWS ON INDUSTRIAL INSURANCE 25 

company. The benefits paid are: (a) disability, daily pay- 
ment up to 60 per cent, of wages, or free hospital care, 
together with payments to dependents up to 40 per cent, of 
wages, from the seventh day of disability; (6) permanently 
disabled, pension up to 60 per cent, of annual wages; (c) 
dependents of deceased, pension up to 40 per cent, of earn- 
ings. In case of wil fulness or gross fault of the injured 
workman there is no indemnity. Controversies are decided 
by an ordinary court. 

Old-age and invalid pensions are provided only by vol- 
untary organizations regulated by orders in council of 1897. 
There were, in 1905, 43 funds, with 12,126 members. The 
ordinary courts are used in cases of doubt. 

SPAIN 

Sickness insurance. A law of 1887 regulates and en- 
courages voluntary insurance societies. Of twenty million 
inhabitants, seven million were wage earners (in 1905). In 
1907, there were 150,000 members of 800 societies. 

Accident insurance is not yet compulsory, but a law of 
1900 fosters voluntary schemes of employers in industries 
and agriculture (where there is motor power). The em- 
ployers pay all the premiums in associations of their own 
or in casualty companies. The benefits are: (a) disability, 
50 per cent, of wages; (6) invalids, lump payment up to 
twice annual wages; (c) lump payment of twice a year's 
wages to dependents of deceased; (d) physician's fees and 
funeral expenses. The procedure before the ordinary 
courts is simplified. There is no indemnity in case of wilful- 
ness or catastrophe. In 1906 there were seven mutual and 
ten stock companies which paid out $288,000 for 32,188 
accidents. 

Old-age and invalid pensions are on a voluntary basis 
for workmen, employees and petty employers (up to $576 



26 INDUSTRIAL INSURANCE 

income) in all occupations. Insurance is effected in a state 
fund supplied by premiums of the insured, with subsidies of 
state, province, commune, savings banks, etc. The highest 
pensions paid are $288 yearly, with repayment of premiums 
if death occurs before pension begins. Settlement in 
ordinary courts, for workmen free of costs. 

HOLLAND 

With 5,700,000 inhabitants Holland has 1,000,000 wage 
earners. Sickness insurance is voluntary and organized in 
free associations. In 1890 there were 650 associations 
with 600,000 members. Premiums are on the average 
$1.44 per member; benefits are: medical attendance, medi- 
cine and sickness payments. 

Accident insurance is compulsory (law of 1901). 
Workmen and foremen in manufactures (up to $1.68 daily 
wages) are insured in a state fund, mutual associations or 
casualty companies. In 1906 there were 82,129 insured 
establishments. Premiums are paid by employers according 
to wages and risk. The receipts of 1906 were $1,176,000. 
The benefits are (a) Disability, free treatment, and daily 
payments up to 70 per cent, of wages; (&) permanent dis- 
ability, pensions up to 70 per cent, of wages from seventh 
week; (c) to dependents of deceased, pensions up to 60 
per cent, of wages and a death benefit of thirty times the 
daily wage. In case of wil fulness no indemnity is paid and 
in case of drunkenness only half. In 1906 $1,032,000 were 
paid to 60,022 injured and 268 killed. Settlements are made 
in case of doubt by councils. 

Of old-age pensions, no general system exists. 

LUXEMBURG 

Sickness insurance is compulsory (law of 1901, 1908) 
for workmen and employees with earnings up to $576, in in- 
dustries and trade. Insurance is effected through local 



LAWS ON INDUSTRIAL INSURANCE 27 

associations and funds. In 1906 of 250,000 inhabitants 
55,000 were wage earners. There were sixty-six funds 
with 36,915 members. The premiums are paid two-thirds 
by employees and one-third by employers, as in Germany; 
the average of $7.68 per person $288,000 in all. Benefits 
paid (as in Germany) : (a) Free medical attendance and 
sickness payments (50 per cent of average wages), or free 
hospital care and half -sickness payments to dependents for 
thirteen weeks; (b) same rates for lying-in women (six 
weeks) ; (c) death benefit of twenty times daily wages. 
In 1906 $268,800 were paid; $8.64 per sick person, or $.73 
per day of sickness. Controversies are settled by supervis- 
ing board without costs. 

The compulsory accident insurance is ordered by laws 
in 1902 and 1908. Workmen and foremen in industry (up 
to $720 annual income) are insured. By regulations, fore- 
men with $720 to $864 are brought under the law. Volun- 
tary insurance is organized for petty employers and em- 
ployees not included in the law. The insurance associations 
are organized by territory. Assessments are levied on em- 
ployers according to the number of employees and the risk of 
the trade to cover the annual expenditures and the pensions. 
Benefits are: (a) Free medical treatment and payments up 
to 66% per cent, of annual wages after the end of the 
sickness insurance, at latest after the fourteenth week; (&) 
death benefit (twenty times the daily wages) and payment 
up to 60 per cent, of wages. All accidents are indemnified 
(except in case of wilful act of the injured person). In 
1907, 36,634 were insured in 2,209 establishments. In one 
year $235,200 were paid in ($640 per insured) and $42,357 
were paid out. Settlements are made without cost before 
committees of the directors, or arbitration courts, or (over 
$288) before the superior court. 

No old-age and invalid-pension system exists. 



28 INDUSTRIAL INSURANCE 

Domestic servants are provided with care in sickness, if 
this is in the contract; otherwise they have no protection. 
Sailors while on board are given medical relief according to 
a law of 1906. 

GREAT BRITAIN 

England has long resisted the continental tendency to 
make insurance compulsory, and it can hardly be counted 
among the nations which have a full legal insurance system. 
Recent legislation, however, indicates that Parliament is 
learning its lesson. 

Sickness insurance (until the recent amendment to the 
Compensation Act, 1906-7) has been almost entirely a 
private matter. The laws of 1875 and 1896 sought to give 
some legal recognition and control to the voluntary agencies. 
Workmen of all occupations are permitted to organize under 
these laws, in free and registered societies. Premiums and 
benefits in the "friendly societies" are regulated by by-laws. 7 

According to statistics of 1904, there were in Great 
Britain forty-two and one-half million of inhabitants, of 
whom thirteen million were workingmen. There were 27,- 
615 mutual benefit societies, with a membership of five and 
nine-tenths million, about half of them being wage workers. 
Official statistics are very incomplete. Partial indemnity 
for loss by occupational diseases is provided under the Com- 
pensation Law next to be mentioned. 

Up to 1880 England gave legal protection to its injured 
workingmen only under the common law of employers' 
liability for damages in cases of negligence, as is still the 
law in the United States. In that year a much more string- 
ent law was enacted under which the employer was made 
liable for accidents caused by defective works, plant, or 
machinery, or by the negligence of persons in authority 
under him. Even this act proved to be unsatisfactory. In 

7 See Baernreither, English Associations of Workingmen. 



LAWS ON INDUSTRIAL INSURANCE 29 

1897 Parliament adopted the Compensation Law based on 
the entirely new principle that a business must make meas- 
ured compensation to workmen injured in any way in the 
ordinary course of employment, unless there is gross fault 
on the part of the employee. To secure indemnity the 
workman is not required to prove negligence in the em- 
ployer, but only the fact that he has been injured in the 
course of employment. 

"If in any employment personal injury by accident aris- 
ing out of and in the course of the employment is caused to 
a workman his employer shall be liable to pay compensa- 
tion." The schedule of compensation is: in the event of 
death, three years' wages, not exceeding 300 ($1,500), but 
not less than 150 ($750), to dependents, or a proportionate 
sum to partial dependents; if no dependents, medical and 
funeral expenses not exceeding 10 ($50) ; during disable- 
ment exceeding one week half the average weekly wage, 
including value of board and lodging, not exceeding i 
($5) a week is paid; in case of permanent disable- 
ment compensation is payable for the whole of the after 
life of the person injured. An injured workman under 
twenty-one years of age earning less than i ($5) a week, 
including value of board and lodging, is entitled to com- 
pensation of full wages, not exceeding 10 s. ($2.40). 

Serious and wilful misconduct or negligence on the part 
of the workman deprives him (or her) of compensation 
only provided the accident does not result in death or per- 
manent disablement. On the other hand, such misconduct 
or negligence on the part of the employer will result in his 
prosecution under the employers' liability act of 1880 and 
the common law and the Fatal Accidents Act of 1846, which 
open the way to much heavier damages in such cases than 
could be obtained under the compensation act. Indeed, these 
laws are always at the disposal of any injured person who 



30 INDUSTRIAL INSURANCE 

elects to take advantage of them, although one cannot 
prosecute both under these and under the compensation act. 
To try under the former does not debar the plaintiff, if he 
fails from trying under the latter, but from any award 
made to him will be deducted the costs incurred by the first 
action. 

In 1900 the provisions of the act of 1897 were extended 
by amendment to agricultural laborers; and in 1906 very 
important additions were made, so that now several diseases 
which can be distinctly traced to the occupation are included. 
An "injury" may be due either to "accident" or to "disease 
of occupation." 

Employers usually find it to their interest to cover their 
risk b$ paying friendly societies or casualty companies to 
carry it for them in consideration of premiums paid. Under 
the act of 18971900 the premiums were said not to be a 
very heavy burden on industry; a small addition to the 
wages fund was sufficient. While we have not as yet suffi- 
cient evidence for a conclusion, the time being brief since the 
new act went into operation (July, 1907), it seems probable 
that the rate of insurance is to be considerably higher. This 
is not so much due to the additional causes of injury named 
in the act as to the uncertainties of litigation caused by the 
interpretation of a cumbrous and awkward law, or rather 
of three laws, each based on a different principle the 
ancient common law, the employers' liability statute of 
1880, and the recent compensation acts. This uncertainty 
breeds litigation and must raise the rates of premiums. 
Many think that a simple and directly compulsory insurance 
law would be far more effective, satisfactory, and inex- 
pensive. But awkward as this law may be, the nation will 
not retreat from it; it will improve it by degrees, English 
fashion, and compel it to work at last. 

Old-age pensions. Since 1885 the statesmen of Great 



LAWS ON INDUSTRIAL INSURANCE 31 

Britain have discussed old-age pensions, have collected and 
published statistics, have talked over schemes, and offered 
bills. For many years the state offered annuities to those 
who made deposits to pay for them up to $500. Between 
1865-90 there were 21,000 pensions, on an average of 
$87.50 each. 

The Old- Age Pensions Bill, after many years of debate 
and the delays caused by the ruinous expenditures of the 
Boer War, passed the House of Commons by a vote of 417 
votes for it and only 29 in opposition; it is a national and 
not a partisan act. The scheme is non-contributory. 

The British Old-Age Pensions Bill (8, Edw. VII) in- 
troduced into the House of Commons in July, 1908, provides 
that the receipt of an old-age pension is conditioned upon 
the attainment of the seventieth year of age, and a residence 
of at least twenty years in the United Kingdom, and the 
means of the person must not exceed 31 10 ,y. One is dis- 
qualified who has been in receipt of any poor relief, except 
in case of medical assistance or relief of the dependent of 
the person in a lunatic asylum, infirmary, or hospital, or 
payment of expenses of burial of the dependent, or any 
relief which is expressly declared by law not to be a dis- 
qualification for registration as a parliamentary elector. 
One is also disqualified who has habitually failed to work, 
according to his ability, opportunity, and need, for the main- 
tenance and benefit of himself and those legally dependent 
upon him; and persons who have been condemned to be 
imprisoned, without the option of a fine, or to suffer any 
greater punishment, or any person of sixty years or upward 
who has been convicted under the Inebriates Act of 1898. 
If any person has directly or indirectly deprived himself of 
any income or property, in order to qualify himself for the 
receipt of an old-age pension, or for a pension of a higher 
rate than he would otherwise receive, that income or the 



'.'F TH 

iVERSITY 

OF 



ITYJ 



32 INDUSTRIAL INSURANCE 

value of the property shall, for purposes if this bill, be taken 
for a part of the means of that person. Pensions shall be 
paid weekly in advance. A pension is inalienable, and can- 
not be assigned by any agreement, nor taken in bankruptcy 
for the benefit of creditors. ^Claims are settled by a local 
pension committee, and by pension officers, with the right 
of anyone to appeal to the central pension authority. A 
local pension committee is appointed for every borough and 
urban district by the council of the borough, district, or 
county. The central pension authority is the Local Govern- 
ment Board, and pension officers are appointed by the 
treasury. Any person knowingly making a false statement, 
for the purpose of obtaining a pension, is liable, on sum- 
mary conviction, to imprisonment for a term not exceeding 
six months at hard labor. In case of obtaining a pension by 
improper representation, one is liable to have to repay to the 
treasury the sums paid him. The treasury, in conjunction 
with the local government board, and with the postmaster- 
general, makes regulations for carrying the act into effect. 
The regulations must provide a way for the claimants to 
make their claims and to obtain information through the 
post-office. The pensions are paid out of monies provided 
by Parliament, and no contributions on the part of the 
pensioner are required. Where the yearly means of the 
pensioner do not exceed 21, the rate of pension will be 5 s. 
per week. The means exceeding 21 but not exceeding 23, 
12 s., 6 d., the pension is 4 s. per week. The means being 
23, 12 s., 6 d., but not over 26, 5 s.> the pension is 3 ^ per 
week. The means being over 26, 5 s., but not over 28, 
17 s. t 6 d., the pension will be 2 s. per week. The means 
being over 28, 17 s., 6 d., but not over 31, 10 s., the 
pension is i s. per week. Where the means exceed 31, 
10 s., there is no pension. 

It is estimated that 572,000 persons will be in receipt of 



LAWS ON INDUSTRIAL INSURANCE 33 

state pensions in the financial year 1908-9. The estimated 
cost will be for the first year, 7,500,000 sterling. The 
objection was raised that the ten-shilling test was unfair to 
men who had paid through their working lives into trade 
unions and friendly societies and were in receipt of small 
pensions from these sources. Therefore the bill was modi- 
fied by introducing a sliding scale. 

Mr. Lloyd George, as chancellor of the exchequer, in a 
speech on the second reading of the bill, disclosed the new 
economic and political doctrine which lies at the basis of a 
national social policy : 

As long as you have taxes upon commodities which are con- 
sumed practically by every family in the- country, there is no such 
thing as a non-contributory scheme. If you tax tea and coffee and 
partly sugar, beer, and tobacco, you hit everybody one way or another. 
Indeed, when a scheme is financed from public funds it is first as 
much a contributory scheme as one financed directly by means of 
contributions arranged on the German or any other basis. Again, a 
workman who has contributed by his strength and his skill to the 
increase of the national wealth has made his contribution to the fund 
from which his pension is to come when he is no longer able to work. 8 

While the English scheme is not yet squarely on an in- 
surance basis it has several remarkable advantages. Thus 
the burden of cost falls upon the employer wholly from near 
the beginning of disability, not after an interval of partial 
contribution through a sickness insurance fund, as in Ger- 
many ; and, as occupational diseases are treated as responsi- 
ble for disability, they are brought under the provisions for 
compensation. Sickness due to other than occupational 
causes must be insured in other ways; there is no legal 
organization yet for this purpose. 

CANADA 

No federal or provincial provisions are made for sick- 
ness, accident, or old-age insurance of workingmen. There 

8 The Outlook, July 18, 1908, pp. 591, 592. 



34 INDUSTRIAL INSURANCE 

are numerous casualty companies which sell sickness and 
accident insurance to individual workmen or by collective 
policies. The Grand Trunk Railway has a provident asso- 
ciation and gives old-age pensions ; the Intercolonial Railway 
has a relief and insurance organization. 9 As the Dominion 
stands in close relations with Great Britain and has an 
energetic and progressive labor department some legislation 
to correct the evils of the employers' liability law may 
confidently be expected in a few years. 

The Toronto Globe, in an editorial of July 26, 1904, 
said : "There are two kinds of provision which every railway 
corporation should make for its employees insurance for 
accidents and insurance for old age." The editor claims 
that such insurance would tend to secure more efficient em- 
ployees and diminish the public losses caused by railroad 
accidents. 

What is true in this regard of a private railway corporation is true 
a fortiori of a government that owns and operates a railway system of 
its own. So long as society cares sympathetically for the unfit, and 
prides itself for the humanity it displays in doing so, there will be a 
logical demand to furnish protection for the infirmity of old age. In 
this country an old-age pension appears to be a long way off, but it is 
quite legitimate to anticipate it by making some provision for the 
support and comfort of government railway employees who have 
become, through age, disease, or accident, unable to endure the stress 
of their responsible calling. It is in the public interest that men 
whose eyesight has become hopelessly dim, whose hearing has become 
incurably dull, or whose nerves have completely broken down under 
the strain of incessant watchfulness, should not be intrusted with cer- 
tain kinds of railway duty, and it is much easier to retire them at the 
proper time, if reasonable provision has been made by the state for 
their future living. 

Friendly societies in Canada.^ There are three types 

9 Riebenack, Railway Provident Institutions, pp. 82 ff. 

10 From the History of Canadian Legislation Affecting Friendly 
Societies, by Ingram E. Bill, in an unpublished manuscript, 1908. 



LAWS ON INDUSTRIAL INSURANCE 35 

of friendly societies organized by Canadian legislation. 
First, the fraternal insurance orders with their logical sys- 
tem, representative government, ritualistic work, and frater- 
nal benefits; second, labor unions which contract insurance; 
third, mutual societies for sick, funeral, and disability bene- 
fits, such as industrial societies, civic employees' societies, 
and other associations where the determining relation is 
occupation, race or religion. 

If we take nineteen of the more important fraternal 
associations which are doing business in Canada, we may 
measure their importance by the following facts : 

These associations have a total membership of 1,190,- 
380, with a total insurance in force of $1,626,695,858. The 
total Canadian membership of the combined societies is 
345,557, with insurance in force to the amount of $405,826,- 
308. The total assets of these societies amount to $30,874,- 
223. Friendly societies in Canada have more than doubled 
during the past ten years and have been an exceedingly 
important factor in preventing the necessity of appeal to 
charity. The Canadian Fraternal Association is a society 
composed of the representatives of seventeen of the promi- 
nent friendly societies of Canada. It was organized in 1891 
and has for its object to unite all fraternal benefit societies 
for the purpose of mutual information, benefit, and protec- 
tion. In Canada, as in the United States, the struggle is 
going on between the unbusiness-like and sentimental theory 
of the earlier organizations and the modern actuarial views. 
The scientific basis is demanded by the leaders of political 
thought in the Dominion and in the provinces, and progress 
is noted on every hand, but it is progress which is impeded 
by thoroughly unsound views as to what can be done. Prob- 
ably, however, the Dominion is nearer to a thoroughly 
business-like control than we are in the United States. The 
policy of the government is, as soon as possible, to bring 



36 INDUSTRIAL INSURANCE 

the insurance associations under government license and 
control, but the more radical legislation proposed by the 
government has thus far been postponed, and it cannot be 
said that the fraternal societies at this time are supporting 
their agreements by requiring adequate premiums and 
reserves. 

AUSTRALIA AND NEW ZEALAND 11 

The states of Australasia have made some of the most 
interesting experiments in the field of industrial insurance. 
The population of the Australasian states of New Zealand 
at the end of 1906 was estimated as follows: Victoria, 
1,237,998; New South Wales, 1,526,699; Queensland, 535,- 
no; South Australia, 383,831; West Australia, 261,746; 
Tasmania, 180,163; New Zealand, 908,726: Total, 5,034,- 

273- 

The wages and cost of living are relatively high. The 

workingmen's insurance in the states of the Commonwealth 
of Australia and of New Zealand exhibits common traits 
in respect to sickness and accident insurance. According to 
the English example, the system is entirely voluntary, and 
the friendly societies are the most important organs, the 
trades-unions having a subordinate place. The compensa- 
tion laws follow the example of the mother country, and 
know nothing of compulsory insurance, but in the case of 
old-age insurance the matter stands in a different light. 
New Zealand was the first state which secured for its citi- 
zens old-age pensions, and New South Wales and Victoria 
have followed in the same path. For persons in the better 
economic positions, industrial insurance in private societies 
is quite extensive. 

Old-age pensions. The old-age pensions in New Zea- 
land differ from the German system in a very important 

"Alfred Manes, in Zacher's Arbeit erversicherung im Auslande, 
Heft 1 8. 



LAWS ON INDUSTRIAL INSURANCE 37 

particular; they do not require premiums to be paid by em- 
ployers or workmen, as such, but the pensions are paid out 
of the state funds. The law of New Zealand justifies the 
granting of old-age pensions by the argument that it is only 
fair that upright persons, who during their productive years 
have contributed to the funds of the colony, by the payment 
of taxes, and to the wealth of the land, by their labor, should 
be cared for in their old age by the country. The argument 
for old-age pension in New South Wales is about the same 
in language, while the legislature in Victoria simply says 
that it is the duty of the state to care for its aged and help- 
less poor. The highest rate of pension, according to the 
legislation in the beginning of 1908, is now 26 annually, or 
10 s. weekly. The law of New South Wales has a provision 
for married persons, which is not contained in the laws of 
the other states. When a husband or wife is authorized to 
receive a pension the amount which can be paid to each of 
them is at most 19, 10 s., annually. These highest rates 
may be reduced for various reasons. Conditions for receiv- 
ing pensions are, first of all, the attainment of a certain age. 
In New Zealand, New South Wales, and Victoria, a person 
must be sixty-five years old. In New South Wales, persons 
under sixty-five years may receive pensions, after they have 
completed the sixtieth year, in case their bodily condition is 
such that they are unable to maintain themselves. New Zea- 
land and New South Wales require an unbroken residence of 
twenty-five years. The New Zealander who claims a pen- 
sion, must show that he has lived a moral and sober life, 
especially during the last five years before the claim is made. 
During the last twelve years he must not have had a prison 
record of over four months, and he must be free from any 
prison record which involves an incarceration of over 
twelve months, and if he is married he must not have 
deserted his wife. Victoria also requires that one who. 



38 INDUSTRIAL INSURANCE 

receives a pension must not have been convicted of drunk- 
enness during the last two years, three times or oftener. In 
New Zealand a pension is not granted to one except when 
his income is not more than 60 per year, or when his entire 
property is not worth more than 260. In New South 
Wales the income must not exceed 25, nor the property 
more than 390. In Victoria it is estimated that the average 
weekly income, during the last six months, should not 
exceed 10 s., and the property of the applicant must be under 
160. The law of Victoria prescribes that the nearest 
relatives of the applicant must be incapable of caring for 
the applicant. He himself must have sought labor to sup- 
port himself and his family. These requirements are not 
found in the laws of New Zealand and New South Wales. 
Since the organization of the Australasian Federation, the 
parliament of 1905 appointed a commission to study the 
problem, and already propositions for an old-age pension 
law, covering all the states of the Federation, have been 
considered. It is claimed that insurance companies are not 
at all affected by the old-age pension law, and it is evident 
that the spirit of self-help, self-support, and thrift has not 
been weakened. The people of Australasia are quite in 
advance of the people of the mother country in savings. 
Only recently have the states begun to pension their civil 
servants. The managers of great industries have further- 
more introduced pensions similar to those in Great Britain 
and the United States. The states of Australasia have 
developed public insurance agencies to reduce the cost of 
life insurance, and private companies, like our industrial 
insurance societies, carry on an extensive business. 

Accident insurance. The legislation of New Zealand 
and other states has followed the development of English 
law. In the year 1854, the cruel earlier law of liability, 
which denied relief to the family of a workman killed by 



LAWS ON INDUSTRIAL INSURANCE 39 

accident, was modified, and a form of the Lord Campbell 
legislation was introduced. The English employers' liability 
law of 1880 was followed by New Zealand in 1882. This 
act gave to the injured workman, in relation to his employer, 
the same rights for indemnity which any other person would 
have in respect to the person who injures him ; but this law 
worked so badly that it was found desirable, after 1897, 
to introduce the workmen's compensation act, according to 
the example of the mother country. The amount which 
can be collected under the liability law has always been 
limited in Australasia, as in Great Britain, to conform to the 
income of the workman injured. The Compensation Act 
of England was introduced into the Australasian states 
after 1897, but it is limited to certain occupations, while the 
employer's liability law, still remaining valid, covers all 
kinds of occupations. 

In New Zealand the employers are left entirely free to 
choose any method of insurance. Since, naturally, many 
employers feel the need of liability insurance or of a collect- 
ive workmen's insurance, there is a considerable demand 
for private insurance, and state supervision of these under- 
takings is required. New Zealand enacted a law, October 
2, 1902, but other states have not imitated the example, nor 
have other Australasian states followed the example of 
New Zealand, which in 1900 established in its state insur- 
ance department a division for accident and liability in- 
surance, chiefly to afford the managers cheaper premiums 
for insurance. The policies of the state insurance depart- 
ment cover the liability of the manager in relation to his 
workmen, up to the amount of 500 for each workman. 
Premiums are graduated according to the wages, and vary 
from 6 s., for 100 wages up to 65 s., in the case of danger- 
ous occupations. In 1905 the premiums of the state depart- 
ment amounted to 23,970, and indemnities to 11,242. 



40 INDUSTRIAL INSURANCE 

Sickness insurance. It has been honestly feared by 
many opponents of state care of old-age pensions that the 
voluntary organization of self-help and thrift would be 
diminished by dependence on the state. So far as the facts 
in respect to Australasia are concerned, this fear is not 
justified. The friendly societies, which are the most popular 
and useful form of insurance co-operation, have flourished 
in, a remarkable degree in Australasia. The English 
colonists took with them their friendly society ideas, and 
developed them in the largest extent. In seven states, in the 
year 1906, there were 4,446 associations with 379,661 mem- 
bers. Each local society had on the average 85 members, 
and it is estimated that more than 30 per cent, of the entire 
population of Australasia shares the advantages of these 
friendly societies. When we consider that in Great Britain 
and Ireland the property of the friendly societies, per head 
of population, is only 5, 8 s., 10 d., and that it is i i, 15 s., 
i d., in Australia, and that the average savings, per head, 
in Great Britain and Ireland are 5, 7 s., 8 d., and in Aus- 
tralia 8, 19 s. } ii d., it would appear that the population of 
these "socialistic" states has developed a greater spirit of 
thrift and of self-help than is known in the mother country, 
which has long opposed any socialistic experiments. Natu- 
rally, these friendly societies, which were founded at first 
simply for mutual, charitable relief, have required constant 
improvement from actuarial criticism and from state legisla- 
tion, but the associations have gradually taken scientific 
ground, and offer, with state supervision, a sound insurance. 
The trades unions have done some work in the field of 
insurance, but their principal purpose has been to improve 
wages and conditions of work people. 



CHAPTER I 

THE EXTENT AND NATURE OF THE DEMAND FOR A 

SOCIAL POLICY OF INDUSTRIAL INSURANCE IN 

THE UNITED STATES 

i. The economic condition of wage- workers calls for in- 
surance as a necessary part of their protection against 
dependence and suffering. While the statistical material 
for determining the number of persons requiring social 
insurance is not entirely satisfactory, it does enable us to 
make a fairly accurate estimate for our purpose. There 
is a common assumption in this country that the wages of 
workingmen are so high that social insurance is not desir- 
able; that, with the ordinary private associations and insur- 
ance companies at hand, there is no demand for collective 
effort, with some measure of governmental intervention, 
stimulus, and regulation. It is not necessary to exaggerate 
poverty to prove the need of a social policy of insurance. 
This is demonstrated by the fact that it is precisely the men 
of the successful classes who realize the wisdom of distribut- 
ing risks, and of providing a fund in case of incapacity for 
labor or of death by the method of insurance rather than by 
depending entirely on savings and investments. If the 
ordinary professional man should wait until his investments 
would provide for his needs in long illness or for his family 
in case of his death, during the first part of his career, the 
family would be practically within a few months of depend- 
ence on charity. On the other hand, no system of saving 
or of insurance can do much for the non-industrial classes, 
as idiots, insane, paupers of all categories, vagabonds, and 
criminals. Workingmen ; s insurance can help only working- 
men those who spend most of their lives earning a living 

41 



42 INDUSTRIAL INSURANCE 

and who are paid wages or small salaries. For defectives 
and paupers industrial insurance is inapplicable, and these 
must be supported by public or private relief; while delin- 
quents are placed under public control at compulsory labor 
in coercive institutions. People of wealth can easily protect 
themselves by investments or by insurance in private com- 
panies. If they pay too much for this benefit, their business 
training enables them to discover legal means of redress and 
correction. But the majority of wage-earners are not in like 
situation and require some form of collective action. 

In this connection we must determine as accurately as 
possible who should receive the advantages of a social policy 
of insurance. Various attempts have been made to estimate 
the average income necessary to prevent dependence on 
public relief and private charity. The average income will 
vary in purchasing power in different localities, and large 
sections of the population do not enjoy the average rate of 
earnings. In certain occupations the workers live in cities 
where rent and food are unduly expensive, and yet their 
earnings are made low by competition among themselves, as 
in the needle industries in New York and Chicago. To 
speak of the average earnings in this connection is often 
misleading mockery. We may, however, give estimates of 
careful observers in relation to the margin of dependence 
on relief. 

Mr. P. Roberts says : "It was shown by the Bureau of 
Statistics of Massachusetts that it takes for a family of five 
persons $754 a year to live." l This does not give the 
minimum standard of bare existence, but a reasonable stand- 
ard of comfort and that only for certain areas in the state of 
Massachusetts. It would not apply to the negroes of South 
Carolina, where one of their families might regard an in- 
come of $400 a year as luxury. 

1 Anthracite Coal Communities, p. 346. 



SOCIAL POLICY OF INDUSTRIAL INSURANCE 43 

The minimum standard means the income below 
which an average family cannot fall without reducing in- 
dustrial efficiency and becoming to some extent dependent. 
Dr. E. T. Devine, whose experience as secretary of the 
Charity Organization Society of New York gives his judg- 
ment special weight, thought that the minimum income on 
which it is practicable to remain self-supporting, and to 
maintain a decent standard of living, was $600 a year in 
his city. In 1904 he thought that the amount should be 
placed at $700 on account of the rise in cost of articles neces- 
sary to maintain existence. In 1907, in view of more recent 
studies, he inclines to raise this figure very much. 2 Here 
again the minimum standard is explicitly reckoned for the 
largest and most crowded city in the United States, where 
rents are highest, food most costly, and the cold climate 
demands good house shelter, much fuel, and warm woolen 
clothing. 

Generally speaking, the class of persons who need and 
can receive benefit from any system of collective insurance 
are, on the one side, not the wealthy, nor, on the other side, 
the dependents, defectives, and delinquents, but, actually, the 
vast majority .of those who live on small wages or salaries, 
and who, in a struggle to live decently and educate their 
children, have difficulty in "making ends meet." In fact, 
this description covers much more than half the population; 
that is, in the United States, perhaps now over 40,000,000 
persons, bread-winners and members of their families de- 
pendent on them for a living. This is an under estimate, 
but it is a number large enough to present a problem worthy 
of arousing the attention of scholars and statesmen. It is 
not worthy of a nation like ours to regard social care as 
merely a means of keeping the weakest members from abject 

3 Principles of Relief, pp. 34-36; cf. Charities and Commons, Novem- 
zer 17, 1906. 



44 INDUSTRIAL INSURANCE 

misery and death by starvation. The aim of social insurance 
is not only to "keep the wolf from the door," but to keep 
him so far away that he cannot destroy sleep with his howls. 
The wage- worker has special claims upon collective con- 
sideration because he no longer has any ownership in the 
materials and instruments of production, nor any voice in 
management of the process nor control of the conditions 
under which his body and mind may suffer. It is this fact, 
and not their absolute misery, which gives the members of 
the wage-earning group a special right to the consideration 
of lawmaking bodies. The employers enjoy armed protec- 
tion of their lives and property, without which they would 
be at the mercy of the majority who are in inferior economic 
position. No class of persons receive relatively so much help 
from government as the rich. Over against this is the 
interest of the wage-earners in having their fortunes pro- 
tected by a power which is above all and which is directed by 
the representatives of all. 

The extent of the group under consideration cannot be 
measured with desirable exactness, but for practical purposes 
the following analysis will aid the judgment. The total 
population of the United States, according to the Twelfth 
Census, including Alaska, Hawaii, Indian Territory, Indians 
on reservations, was 76,303,387 (75,693,734 without count- 
ing the persons in districts named), of whom 66,890,199 
were whites and 8,803,535 of African descent. 3 

The number of persons at least ten years of age who 
were engaged in gainful occupations was given in the last 
census. 4 Only a part of the more significant facts are here, 
reproduced. Of 10,381,765 engaged in agricultural pur- 
suits, 4,410,877 are called agricultural laborers and 5,674,- 

s Statistical Abstract, 1903, p. 22. The Statistical Abstract for 1907 
(p. 686) estimates the population at 85,817,239. 
4 Ibid., pp. 494-97- 



SOCIAL POLICY OF INDUSTRIAL INSURANCE 45 

875 farmers, planters, and overseers. Many other laborers 
are lumbermen, raftsmen, wood-choppers, etc. The negro 
laborers of the south must be studied apart. 

In the group "professional services" we notice that 
teachers and professors in colleges number 446,133, the 
majority of whom require some form of insurance, espec- 
ially for sickness, invalidism, and old age, since they are on 
low salaries. 5 The "trade and transportation" group in- 
cludes persons of widely differing incomes, but nearly all 
need industrial insurance, and it is with this group that the 
most reliable insurance schemes have already been organized. 
There were in this class 4,766,964 persons. 

In the group devoted to "manufacturing and mechanical 
pursuits" there were 7,085,992 persons (5,772,788 males 
and 1,313,204 females). The great majority of these are 
wage-workers or employees on small salaries, and need 
industrial insurance in all its forms. The employees are not 
separated from the employers in this enumeration. It is 
well known that the tendency is to increase the relative ratio 
of wage-workers to employers where the great industry 
prevails. The total number of persons above ten years of 
age in "gainful occupation" was 29,074,117 (23,754,205 
males, 5,319,912 females). 

Of family incomes of workingmen in the United States 
we have a valuable recent study based on investigations of 
the conditions of life for 25,440 families in various callings 
and districts. The data were gathered in the principal indus- 
trial centers of thirty-three states, including the District of 
Columbia. 6 The investigation was restricted to families of 
wage-workers and of persons on salaries not exceeding 

5 National Education Association, Report of Committee on Salaries, 
Tenure, and Pensions of Public-School Teachers in the United States, 
1905. 

* Eighteenth Annual Report of the Commissioner of Labor, 1903: 
"Cost of Living and Retail Prices of Food." 



46 INDUSTRIAL INSURANCE 

$1,200 a year, and persons engaged in business on their 
own account were not considered. The facts refer chiefly 
to the year 1901. We may select one of the most general 
statements of income : 

The total family income varied from $908.68 in Colorado to $420.03 
in South Carolina. In eight states the income was above $800 per year, 
in twelve states between $700 and $800, in ten states between $600 and 
$700, in two states between $500 and $600, and in one state below 
$500. The largest average income per family from all sources in 
any of the geographical divisions was $883.39, reported for the West- 
ern states. In the North Atlantic states it was $755.49; in the North 
Central states it was $751.62; in the South Atlantic states it was 
$690.80; and in the South Central states it was $675.42. 

These family incomes were made up from several sources : 
Expressed in percentages, these figures would show that 79.49 per 
cent, of the average income of all families came from the earnings of 
husbands, 1.47 per cent, from the earnings of wives, 9.49 per cent, 
from the earnings of children, 7.78 per cent, from boarders and 
lodgers, and 1.77 per cent, from other sources. 7 

The difficulty of representing the actual condition of 
many families through these general statements has been 
felt by all students. Professor Mayo-Smith, on the basis 
of earlier data, ventured the statement, with very strong 
qualifications as to the value of the estimates, that the aver- 
age annual earnings for all employees, in 1890, excluding 
officers, firm members, and clerks, was $444.83. 

This figure is, perhaps, the nearest approach we have to an average 
wage for the United States. It is not, however, a typical wage, for 
the reason that it includes the wages of men, women, and children, of 
apprentices and piece-workers. 

The figures given indicate the narrow margin between 
income and subsistence. A few weeks of sickness or inca- 
pacity through accidents, and the meager reserve is con- 
sumed, and the family faces want and dependence on 

7 Eighteenth Annual Report of the Commissioner of Labor, 1903: 
"Cost of Living and Retail Prices of Food," p. 58. 



SOCIAL POLICY OF INDUSTRIAL INSURANCE 47 

charity ; for the little savings and feeble credit on honor or 
pawn will not go far. The statistics of charity give a 
picture, though as yet very imperfect, of the number of 
families who each year cross this line, and eat the bitter 
bread of public or private relief; but no statistics which can 
ever be gathered can visualize the conditions of constant 
dread of suffering and pauperism which are the hourly 
torment of thoughtful workingmen. 

If we turn to the question of savings, we encounter 
serious complications ; for the deposits in savings banks are 
composed of the savings of persons of all classes. In the 
Report just cited it is said that of 2,567 families studied,- 
1,480 families had a surplus at the end of the year, and dis- 
posed of it as follows: kept it on hand, 491 families; placed 
it in bank, 682 families; invested in building associations, 
63 ; in real estate, 42 ; in shares of stock, 5 ; loaned money, 
3; paid debts, 60; other methods, i; not reported, 133 
families. 8 

The Statistical Abstract for 1903 (p. 72) stated that in 
the United States, in 1902-3, there were 7,035,228 deposit- , 
ors in the savings banks; the amount of their deposits was 
$ 2 >935> 2 4>845; the average to the credit of each depositor, 
$417.21. But this gives little direct light on our subject, 
because the social and financial classification of depositors 
is not given. 9 

It would be interesting to know how far the savings of 
workingmen are invested in some form of insurance; and 
here we have considerable information, but not much that is 
encouraging. Of 2,567 families reported to the commis- 
sioner of labor, 806 held insurance on property and 1,689 

8 Op. cit., p. 512. 

9 Ibid., pp. 421-69, 501. The Statistical Abstract for 1907 (p. 618) 
gives number of depositors, 8,588,811; amount of deposits, $3,690,078,945; 
average to each depositor, $429.64. 



j.5 INDUSTRIAL INSURANCE 

cm fife; 944 paid does to labor organizations, and 1,123 to 
other kinds of organizations, including a certain sum for 
insurance. On the surface the showing is very impressive. 
There were in the year 1902, in the United States, 4,160,088 
policies of the ordinary form, with annual payments of 
premium, or at least infrequent payments, in force. The 
face value of these policies was $8,701,587,912. 

The total income of all companies was $504,527,705, and 
payments to policy-holders $199,883,721; the assets, $2,- 
091,822,851; the surplus, $293,685,990; the number of 
policies of all kinds, 17,608^212; and their value, Sio.- 



If we turn to the "industrial" companies, we have to 
deal with insurance which really touches vitally die working 
people on small incomes, and in these companies we find 
13.448,124 policies, with a face value of $1,806,890.864. 
The average amount of each policy is small about $135. 10 
This analysis win be carried further in the discussion of 



Another point of view may be taken for the considera- 
tion of die need of insurance of workingmen in this country. 
Have they accumulations of wealth which will furnish them 
credit in case of incapacity for daily labor? Here again 
the averages of wealth per inhabitant, tnrTnHing billionaires 
and day laborers, are absolutely deceptive. Though often 
cited by political partisans to prove the extraordinary pros- 
perity of wage-earners, they have no value for any such 
purpose. And when we come to classify the population by 
income we confront serious, perhaps insuperable, difficulties. 
C D. Wright says: "American statistics do not warrant any 
very careful classification of the distribution of wealth." 11 



Abstract, 1903, p. 421, prepared by Frederick L. Hoff- 

^f. ^*.__ % * __ A *_- ** , . , - . __ 

ox \mt mntmui company. 
Prmc*cml Socwtogj, Sfk ed, rer., 1902, p. 



SOCIAL POLICY OF INDUSTRIAL IXSURAXCE 49 
He quotes Mulhafl's f^mat^ for England: 




2. There is a marked tendency in aH modem 
to form a group of families dependent on wages or small 
salaries for their firing. These are in a certain degree 
dependent on managers of capital even for the opportunity 
of labor and for the Vigi minatinm of the mndilinHH of fife. 

In no country is the growth of the great imfus! ry mote 

marKCu rtmn in Tii^ United ^f^f^c. it is 1^ IP? that, 
cultural occnpatioos have not yet CCTIJ^ info this 
and t h^M w^fy many nino^ysrt'e iiKinPt^Te^ are tanrw 
ous and have a prospect for the future. But tfa^y eddies 
not divert our attention froui the mam direction of 



l df nHfli|iifirt- Tti^ ^nlargf^nrni' and rrmrmti^linM 

of the class of wage-earners are facts of vital importance in 
relation to the need of social insurance. The numgci of 
business finds in the business itself means of invesOucut and 
a pnmaon for periods of incapacity for active labor a 
store which he can personally control The well-paid pro- 
fessional man can support himself m periods of Vi^inf ^ in 
skioiess and old age, out of fiiuiifLil reserves iuve&tcd in 
productive funds. The farmer can rely upon a mortgage 
or sale of lands or cattle for credit or income while he is 
laid aside ijxuki personal industry. But the wage-worker 

^T^r".rri--"'" _"_Vr"5 IT. .." rf ~'".~~~ 1 __ _~lr J T " 5"JL~ r'5 "V.15* r*r ?!_ 1 

for in money; the wages of most members of this class fur- 

T:5;: s-j.ir.T TT'^'^r:" ;: 5.:r?.u? ~~~ :r.'-'-^sn~'.-z.r.~ ~:~.-? 
tion of a fund winch win provide 



50 INDUSTRIAL INSURANCE 

a long and painful process ; and thus the only reliable method 
of providing surely and at the beginning of need for emer- 
gencies is insurance. A. Manes 12 says : 

This brings us to the difference between saving and insurance. He 
who saves in order to meet a future expenditure must have enough 
time for it. He who insures himself is protected from the moment 
he takes out a policy, however small his first premium. He who 
undertakes each year to set aside 1,000 marks in order to leave to his 
heirs in case of death a large capital, but who dies in the first year, 
leaves merely 1,000 marks increased by interest. But he who insures 
himself for 10,000 marks and dies after paying a few marks in 

premiums leaves to his heirs 10,000 marks The saver is isolated. 

He cares only for himself. His savings help only himself or his 
family. Insurance is in strong contrast and rests on the principle: All 
for each, each for all. 

The table shows by an example the advantage of insur- 
ance over savings. The case is one of a man thirty-five years 
of age insured for 10,000 marks in a company, and the 
corresponding savings, interest at 3 per cent. The sum of 
the premiums, if placed in a savings bank, will not equal the 
sum given by the policy until nearly the end of twenty-five 
years. If the insured dies before that time his heirs receive 
more than the savings would give, and much more if he dies 
within a few years. If he lives to the end of the twenty-five 
years and takes the 10,000 marks he can put that out at 
interest and receive a fair income. If the insurance prem- 
iums are not taxed, as in some countries is true, there is a 
further gain over savings. 

Investments in the securities offered by industrial and 
commercial companies, even if there are savings to invest, 
seem to the person unacquainted with this world of specu- 
lators as little better than gambling. Secure bonds render 
slight returns. 

The tendency toward the enlargement of a class of per- 

12 Versicherungswesen, pp. 1 1 , 12. 



SOCIAL POLICY OF INDUSTRIAL INSURANCE 51 



TABLE I 
INSURANCE FOR 10,000 MARKS, PAYABLE AT DEATH OR AFTER 25 YEARS 



Number of Years Paid by 
Insured Beginning at 
Age Thirty-five 


Annual 
Premium 


Sum of Savings, 
plus Interest at 
3 per cent. 


Sum 
Insured 


Sum of Insurance 
Payable above 
the Savings 


I 


Marks 
421 oo 


Marks 

d.21 


Marks 
IO OOO 


Marks 


2 


421 oo 


8 


IO OOO 


O/v 


3 


421 oo 


I 3OI 


IO OOO 


y>- l 45 
8 600 




421 oo 


i 761 


IO OOO 


o,uyy 
8 23O 


4. . . 


421 oo 


2 23 5 


IO OOO 


>^OV 
7 76c 


6 


2 2O 8O 






/>/ u D 


7~ 


212 4O 


3OI 




>377 
6 o8c 


8 


30^.00 


> v *3 

7 411 


IO OOO 


u >y5 
6 <8o 




2O8 4.O 


7 8l2 


IO OOO 


6 188 


10 


2OO 7O 


4217 


IO OOO 


5782 


ii 


282 90 


A 627 


IO OOO 


>/o 


12 


274. oo 


5O4.O 


IO OOO 


0>O/O 


13. 


266 8O 


C ACS 


IO OOO 




14 


2^8. <O 


* 881 


IO OOO 


A TTQ 


je 


2dO OO 


6 3O7 






16 .... 


241 oo 


6 737 




j93 


17. . 


231 80 


7 171 




>^ U J 

2 82O 


18 


222 40 


7 608 


IO OOO 




IQ 


212 7O 






^>ov^ 


2O 


2O2 60 


> u 4y 




I >95 1 


21 


IO2 3O 






o 


22 


181 60 






>59 


23 


I7O ^O 


y>ov u 

O 8.d.3 






24. 


I ^O OO 


y>4o 

IO 2O7 




J 57 


2Z. 


147 IO 


**ni*yVr 


















6,928. 20 









sons dependent on wages is indicated in this citation from 
Mayo-Smith : 

While population from 1880 to 1890 increased 24.6 per cent., the 
number of persons ten years of age and over engaged in gainful occu- 
pations increased 30.7 per cent. The increase in agriculture, fisheries, 
and mining was, however, only 12.6 per cent., and in domestic and 
personal services, 24.5 per cent. On the other hand, the number of 
persons engaged in professional services increased 56.6 per cent.; in 
manufacturing and mechanical industries, 49.1 per cent.; and in trade 
and transportation, 78.2 per cent. 18 

13 Mayo-Smith, Statistics and Economics, p. 70. 



52 INDUSTRIAL INSURANCE 

This means that most of the workers are absolutely without 
hope of escaping from a position in which they depend on 
capitalists for employment, and that their permanent inter- 
ests are with their own group. The same writer presents 
further illustrations in the words : 

In the manufacture of agricultural implements the number of 
establishments decreased 1,033 or 53 per cent, while the number of 
employees increased 2,964 or 7.5 per cent., and the value of the 
products twelve million dollars or 18.4 per cent. 1 * 

In the manufacture of boots and shoes, gristmills, paper 
factories, cotton-mills, the same tendency is observed. But 
the fact is too familiar and obvious to require further 
mention. 

3. The necessity for providing industrial insurance has 
become acute. If the nation only knew the facts, there would 
be radical legislation within a short time. But, as a matter 
of fact, men of the business world, forced by the absurd 
employers' liability laws, have followed a policy of conceal- 
ment as by a universal instinct. Of occupational accidents 
we gain suggestive glimpses, but of the causes of disease and 
premature age and death in industries we have in this coun- 
try little information either from governments or from 
insurance companies. The insurance companies are ap- 
parently afraid to join in a comparative study of their own 
experience, for fear their competitors will use the informa- 
tion. And so we are compelled to put together mere frag- 
ments of knowledge, and hope that the general and sl^ate 
governments will pursue the study, and thus awaken general 
interest and direct action. Only in the reports of the Inter- 
state Commerce Commission have we fairly satisfactory 
reports of accidents to passengers, workmen, and others. 
The laws of eleven states require reports of accidents in 
factories, but only one state is attempting to secure reports 

14 Mayo-Smith, Statistics and Economics, p. 173. 



SOCIAL POLICY OF INDUSTRIAL INSURANCE 53 

of accidents in all industries. The state of Wisconsin passed 
a law in 1905 which makes it the duty of physicians to 
report all accidents which result in the serious injury of 
workmen and cause incapacity for work during a period of 
more than two weeks. In the Eleventh Annual Report of 
the Department of Inspection of Indiana (1907) it is said: 

There have been reported during the year .... 2,287 accidents. 
Of these, 62 were fatal, 454 serious, 455 slight, the latter causing the 
loss of five to twenty-five days' time, and 1,316 very slight accidents, 
resulting in loss of less than five days' time. 

From the table it appears that the average age of the 
person injured was 20.4 years ; extremes of age 14-65 years. 
Out of 924 cases, 467 were heads of families and 457 not 
heads of families; 491 were injured on machinery and 269 
otherwise; 235 on guarded machinery and 189 on machinery 
not guarded. The highest loss of wages was $oo, the least 
$i. Wages were paid by employers during disability in 163 
cases in amounts from $i to $300. Burial or medical ex- 
penses were paid in 395 cases in amounts from 50 cents to 
$308, and in 80 cases the amount not being stated by the 
company in 315 cases ($7,862.49) ; by the insurance com- 
pany in 68 cases; by the insurance company and employing 
company in 4 cases; by the man himself in 25 cases; by the 
insurance company and the injured in i case; by self and 
employee in 5 cases. In 151 cases from i to 10 persons were 
dependent on the injured workman. 

The Bureau of Labor Statistics of Illinois published in 
1908 its first report for six months on industrial accidents 
under a law which requires employers to report accidents 
which cause disability of thirty days or more. During the 
six months ending December 31, 1907, there were reported 
1,392 casualties; of which 298, or 21.4 per cent., resulted in 
death and 1,094, or 78.6 per cent., were not fatal but caused 
disability for at least thirty days. 



54 INDUSTRIAL INSURANCE 

The most valuable recent report is that of Wisconsin 
(Thirteenth Biennial Report of the Bureau of Labor and 
Industrial Statistics, 1907-8). The total number of injuries 
reported from October i, 1906, to October i, 1907, was 
13,572, of whom 7,186, or 53 per cent., were of workmen 
engaged in their employment, the others being accidents to 
those either not at work or at work for themselves. The 
reports are made to the State Board of Health by physicians 
and cover injuries to all persons if the accident causes disa- 
bility o.ver two weeks. Of the 7,186 injured in the course 
of occupation 7,030 were male and 156 female; married 
3,130, single 3,875, unknown 181. The fatal injuries were 
2.8 per cent. ; non- fatal but permanent, 14.4 per cent. ; tem- 
porary, 80.9 per cent. 

The cost to employers of injured workmen in 503 estab- 
lishments in 1906 was: for employers' liability premiums, 
$135,370.49; for workmen's collective accident premiums, 
$13,489.03; for all other expenses, including sums paid 
directly, medical aid, and wages allowed, $36,774.30; total 
expense, $185,633.82; of which seven employees received 
$84,430.39, or 45.49 per cent. 

One of the most important casualty companies has given 
out certain figures which they have made in connection 
with insuring employers from loss occasioned by damage 
suits of injured workmen. During the years 1889-1903 
this company issued policies to employers who paid out 
$1,905,515,398 in wages to about 3,811,030 workmen, and 
in this number there occurred 185,088 accidents. After 
bringing together all the evidence he could collect, Dr. 
Josiah Strong estimates the number of killed and wounded 
in the army of labor at over 550,000 annually. This does 
not include the sickness and death caused by occupations. 

This is 50 per cent, more than all the killed and wounded in the 
late war between Japan and Russia. There are more casualties on our 



SOCIAL POLICY OF INDUSTRIAL INSURANCE 55 

railways in a single year than there were on both sides of the Boer 

war in three years There were twenty-four times as many 

casualties on our railways in one year as our army suffered in the 

Philippine war in three years and three months Taking the 

lowest of our three estimates of industrial accidents, the total number 
of casualties suffered by our industrial army in one year is equal to 
the average annual casualties of our Civil War, plus those of the 
Philippine war, plus those of the Russian and Japanese war. 15 

The hazard varies, of course, in different occupations. 
In an investigation made in New York for 1899 and cover- 
ing selected industries it was found that the number in 1 ,000 
injured was in stone and clay products, 15.18; metals, 
machinery and apparatus, 26.57; wood, 18.42; leather, 
rubber, pearl, etc., 3.21; chemicals, oils, and explosives, 
44.06; pulp, paper, and cardboard, 41.46; printing and 
allied trades, 9.19; textiles, 8.91; clothing, millinery, laun- 
dering, etc., 1.35; food, tobacco, and liquors, 13.51; public 
utilities, 37.28; building industry, 26.20. Mr. F. L. Hoff- 
man estimates the average annual number of miners killed 
in the United States and Canada at 2.64 per 1,000. The 
number of men killed per 100,000 of population in the regis- 
tration states during the year ending May 31, 1900, was: 
in the professions, 61.1; mercantile and trading, 46.0; 
laboring and servant, 220.2; manufacture and mechanical 
industry, 88.4; agriculture, transportation, and other out- 
door, I39.6.- 16 

It is probably generally supposed that agricultural in- 
dustry is comparatively free from accidents; but this does 
not seem to be true. The figures we have for America agree 
with those which have been collected in Europe. The num- 
ber of deaths of men (between fifteen and forty-four years 
of age), according to the Twelfth Census, was in cities 

15 North American Review, November, 1906, pp. 1030 ff. ; Social Ser- 
vice, August, 1906. 

"Bailey, Modern Social Conditions, pp. 247-97, 253. 



INDUSTRIAL INSURANCE 



122.4 P er 100,000 population, and in the rural population 

I22.I. 

The mortality from accidents in specified occupations, 
according to English experience, 1890-92, is shown by Mr. 
F. L. Hoffman in this table (rate per 1,000 at each age). 17 

TABLE II 









General 






Unhealth- 




Ages 


Profes- 
sional 


Agricul- 
tural 


Trades 
and In- 


Unhealth- 
f ul Trades 


Dangerous 
Trades 


ful and 
Dangerous 


Common 
Labor 








dustries 






Trades 




is-^ 


O.I 


0-3 


0-3 


0-3 


1.4 


1.6 


0.4 


2024 


O. 2 


O. 1 


O. 3 


o. 3 


1.6 


1.6 


0.6 


2C T.A. 


O 2 


o ^ 


O 4 


O 4. 


I 6 


i 8 


o 8 


35-44 


-3 


o-5 


o-5 


0.6 


I. 9 


2. I 


1. 1 


45-54 


-3 


0.6 


0.8 


0.8 


2-3 


2.8 


J -5 


c e 64 . 


o 6 


I O 


i i 


i i 


7 .O 


3. 2 


2. O 


65 and over 


I.O 


1.6 


1.9 


2. 2 


3-9 


4.1 


3-4 



4. Influence of individualistic optimism on the progress 
of social policies in the United States. Confidence in the 
ability of each man to care for himself has grown out of 
the facts of those early economic conditions when the hunter 
defended himself Indian fashion against Indians, and earned 
his livelihood on his own farm. In one generation a nation 
has passed through all stages of industrial development, 
from hunting and household production for household use to 
leadership in collective production by huge combinations 
for a world-market. Sentiments, in the form of prejudices, 
survive the situation which produced them, men carry the 
ideas of the isolated farm into the congregate life of cities 
where they are out of place, and fathers teach to sons the 
philosophy of Poor Richard's Almanac in an environment 
where it requires enlargement to explain and fit the facts. 
Until very recently it was the common belief, for which 
there was much evidence, that any industrious, sober, and 
thrifty wage-worker could become an independent manager 

17 Annals of American Academy, May, 1906, p. 28. 



SOCIAL POLICY OF INDUSTRIAL INSURANCE 57 

of business; and this cheerful faith endures millions of 
disappointments. 

Leadership is still largely in the hands of vigorous men 
who climbed to places of power under the spur of this faith 
in individual effort, and who, spite of the revolution in 
methods of conducting affairs, preach the same doctrine to 
thousands of wage-workers whom they control as with a 
rod of iron. The unconscious assumption of our captains 
of industry is that intervention of government is necessarily 
evil unless they happen to be in a council asking a fran- 
chise, or in a lobby asking for a protective tariff for some 
infant industry. The managing class, mindful of the suc- 
cess of their splendid confidence in their own power to 
master difficulties, sincerely believe that wage-workers have 
no need of social care. They have been encouraged in this 
creed by the economic and political instruction which had 
its root in the revolutionary effort to cast off mediaeval 
restrictions. According to this theory, the state has one 
task that of preserving order and property, while compe- 
tition is left to work out all the advantages which they 
expect from it. "The best government is that which gov- 
erns least," has been a popular proverb. 

It is true that the logic is forgotten when a railroad com- 
'pany asks from government half the land along its right-of- 
way, and a large cash bonus to reward its enterprise and 
make dividends secure; or when a city council has special 
privileges to barter. They return to the inherited theory 
when rates are to be regulated, workmen are to be protected, 
or lives of citizens to be safeguarded. The stinging epithets 
of "socialist" or "paternalist" are apt to be flung at anyone 
who suggests that the nation which demands of its work- 
men both taxes for support, and in war lives for its defense, 
ought to act in return so that its wise paternalism shall 



58 INDUSTRIAL INSURANCE 

evoke patriotism. 18 When one seeks to gather from the 
experience of older countries lessons to guide our own 
action as we move onward rapidly to the economic condition 
of ancient states, we are told that we of a free republic 
cannot copy the methods of "absolutism," cannot submit 
to the "tyranny" of a country like Germany. Progress is 
often halted for a time by such catchwords which betray 
provincialism of thought. 

Distrust of governmental interference is fostered by 
defects in our political organization and conduct familiar 
to all, and these are largely due to the fact that the hope of 
prizes in the world of management has drained off much of 
the best talent to business and away from direct public serv- 
ice of the community. It is not too much to say that the 
average successful business man has an ill-concealed con- 
tempt both for the ability and for the integrity of men who 
direct politics. There has been so much inefficiency and cor- 
ruption under the spoils system that only too much reason 
exists for this widespread distrust of competent men for 
those in charge of municipal and national administration. 
Some of the leaders of business have only too intimate 
knowledge of the ways in which representatives of the 
people can be purchased to have respect for politicians as a 
class, for they have themselves made the deals. This dis- 
trust has been deeper and wider than was deserved ; for, in 
fact, the administration of many public works has been, on 
the whole, successful and a part of the national glory. 
Where the public administration has failed it might have 
succeeded better if business men had not been so absorbed 
in making themselves rich. Failure of government is no 
credit to them. 

5. The absence of a national legislative power and of 
either national or state administrative organs adapted to 

18 What is patriotism but love for "fatherland"? 



SOCIAL POLICY OF INDUSTRIAL INSURANCE 59 

insurance has tended to retard progress in the social protec- 
tion of workingmen. Congress is limited by the Constitu- 
tion to interstate commerce, to the District of Columbia and 
the territories, as a field of legislation and control. Many 
of the industries can be touched only by state laws. In the 
states until recently a central administrative organization 
has been almost entirely wanting. In Germany there has 
long been a central administration with great power, and in 
France the nation is accustomed to give to the regulations 
of administrative councils all the force of law. The develop- 
ment of the Home Office in Great Britain enables the legis- 
lator there to enforce laws which here would require the 
creation of new agencies or the very great increase of 
functions of existing organs. The independence of each 
state is an obstacle in the way of passing laws which involve 
expense in the management of business, since the manu- 
facturers and traders of each state are in competition with 
those of all other states. These are some of the difficulties 
which must be overcome in the process of securing for 
workingmen the protection and insurance which have come 
to be regarded as just in all other advanced nations. A bill 
brought before the Legislature of Massachusetts in 1904 to 
introduce the British Compensation Act of 1897 was de- 
feated by the claim of the manufacturers that the indemnities 
required of them would cripple them in competing with 
manufacturers of other states. The same argument could 
be used in all other states, and we should have a deadlock, 
if the argument were sound. 

6. In order to escape from this whirlpool in which our 
political system seems to hold us, it must be shown that the 
social policy of protection, education, and insurance, so far 
from being a financial burden on the manufacturers of a 
state, is a paying investment; that the best investment of a 
business community is not in machines of steel and wood, 



60 INDUSTRIAL INSURANCE 

but in its productive human agents ; and that the state which 
first commits itself honestly to this policy and works it out 
wisely will take and keep the lead in business, by attracting 
and holding an army of healthy, sober, conservative, rela- 
tively contented and faithful workmen. This is no place to 
do more than suggest the outline of an argument in favor 
of this proposition. It rests on the fact that the condition 
of bodily vigor, of comparative contentment and serenity 
of mind, of freedom from irritating and depressing despair 
in prospect of incapacity to earn a living temporarily or 
permanently, is an asset of first importance in the process 
of continuous manufacture. The workman who has suit- 
able conditions of human existence is for that industrially 
more efficient, is a better customer with larger and more 
steady purchasing power, loses less time by drunkenness and 
vice, has more varied wants, and demands more kinds, finer 
grades, and larger quantities of commodities. The state 
whose industries take best care of its men will swiftly and 
surely attract and hold the best workmen. It is the fashion 
in some quarters to undervalue this argument, and to ascribe 
all virtue to improved machinery and shop organization 
and modes of paying wages; but, after all, the experience 
of a century is worth more than the passing passion of a 
man sore after a strike, and common-sense will surely come 
to the help of morality and decide that, on the whole, human 
workers, with sound bodies and varied wants, are at once 
our first factor in large production and our largest market 
for goods made. A million such civilized customers are 
better than several millions of naked savages or all the 
spendthrifts in the world. 

It is a pleasure to quote the testimony of a man in the 
highest position in finance, that workingmen's insurance 
"has become one of the leading factors in helping Germany 



SOCIAL POLICY OF INDUSTRIAL INSURANCE 61 

to the industrial pre-eminence which she' is gaining." 19 In 
speaking of the sickness insurance of Germany he says : 

The testimony in regard to the value of the work done in the sick 
insurance system is almost universally favorable. It would be hard 
to calculate its economic importance, but it is so great that it has 
become one of the leading factors in helping Germany to the industrial 
pre-eminence which she is gaining. 

7. The attitude of the trade-unions to obligatory insur- 
ance, the only kind which can ever afford help to all and 
especially to those who most require it, is still in doubt. 
The national assembly of the American Federation has voted 
down a resolution favoring such insurance in the form 
presented to it. 20 But the probability is that under its more 
recent forms, when once clearly explained to the members 
and properly presented, it will soon win their favor. Obliga- 
tory workingmen's insurance has been in the past in this 
country connected with attempts to compel the workmen to 
pay an excessive share of the premiums, to break the power 
of the union and alienate its members, and to retain the 
equitable share of the funds to which the men have contrib- 
uted if they leave the service or are discharged. In conven- 
tions the propositions for collective insurance have been 
championed by the socialist faction and have gone down in 
the defeat of this party. Insurance in the European sense has 
never yet been offered to our workmen in any state. When 
it is shown that obligatory insurance does not mean absolute 
control of employers, but union of effort in which both 
sides are fairly represented in local management; that the 
interest in collective bargaining remains untouched; that 

u Mr. F. A. Vanderlip, in North American Review, December, 1905, 
p. 925- 

"The federal Bureau of Labor is now engaged in a thorough investi- 
gation of the whole subject, and a report is expected before many months. 
Some results of the investigation have already been published and are 
used in this volume. 



62 INDUSTRIAL INSURANCE 

voluntary organizations are recognized and made secure by 
suitable state supervision and control and that taxpayers, so 
far from being asked to increase burdens, will be substanr 
tially relieved from many charity demands, it seems likely 
that indifference and antagonism will change to approval. 
Mr. John Mitchell has expressed a favorable opinion which 
already has won the attention and the approval of many 
trade-unionists. 21 

8. America has no system of industrial insurance, but a 
beginning has been made from various starting-points local 
societies, trades-unions, fraternal societies, employers' initia- 
tive, private corporations, casualty companies, and munici- 
palities. The nation throughout its history, from Plymouth 
pilgrims down to our own day, has developed the most 
extensive pension system known to the civilized world. Out 
of these fragmentary, contradictory, inadequate, unsyste- 
matic experiments the nation has yet to develop a consistent 
and worthy social policy. It is our purpose to describe these 
various schemes, and to inquire what measures promise 
immediate improvement and tend in the right direction. 
Signs are not wanting that many of the most competent 
leaders of industry and commerce will in the near future 
give much more attention to this problem than they have 
hitherto done. 

21 Report of Industrial Commission, Vol. XII, p* 50. 



CHAPTER II 
LOCAL RELIEF SOCIETIES 

The most simple and primitive form of industrial insur- 
ance is found in the numerous mutual benefit associations 
which exist everywhere and under many forms. Some of 
these are aided by the employers and others are supported 
entirely by the contributions of the members. These mutual 
aid associations are the elementary school of thrift, of 
brotherhood, and of the future social policy which is grow- 
ing up within these voluntary organizations. These 
societies rarely have any centralized organization to bind 
them together, the state does not recognize their existence 
until they become federated and important, and their by-laws 
have no direction from actuarial experts. They spring up 
spontaneously and by imitation in response to economic 
necessity, and they are found among wage-earners of many 
occupations and of many nationalities in our large cities. 
German, Scandinavian, Italian, and Hebrew immigrants find 
in their little societies protection and support in the hour of 
sickness and sorrow. The negroes have similar organiza- 
tions and are greatly attached to them. Reliable statistics 
are not accessible, because there is no central office nor 
general system of reports. The administration is often 
changed and usually inadequate, while the bookkeeping is 
ordinarily very crude and unsatisfactory. It would be 
almost impossible to reduce their premiums and benefits to 
tabular form, because each society has its own peculiarities. 
All that is here attempted is to give a certain number of 
significant illustrations and to call attention to certain 
general tendencies. 

Mutual aid societies of immigrants from Europe. In 

63 



64 INDUSTRIAL INSURANCE 

a foreign land and among strangers the poorer immigrants 
seek fellowship, encouragement, and care among those who 
understand their language and sing the songs of fatherland, 
In the large cities the people of the same race or nationality 
establish societies of a charitable nature in order to succor 
their countrymen who have not yet won a secure place and 
means of self-support. Those who have lived in this coun- 
try some time and have become prosperous are proud to 
relieve the distress of those recently arrived. Public relief 
and the alms of other races are felt to be disgraceful, and 
soon the industrious immigrants prefer to aid each other 
through contributions to a mutual benefit society where the 
thought of alms is not present. For some time the benefit 
societies retain something of the character of their origin 
in charitable relief, but the tendency is to remove them as 
fast as possible from this ground. Naturally these inde- 
pendent new citizens associate themselves with persons of 
their own race and language. This tendency is fostered by 
the fact that immigrants often form "colonies" of members 
of the same nationality and religious confession, and thus 
we have Bohemian or Italian quarters and sometimes a 
Ghetto. Frequently these colonies contain thousands of 
persons who come from the same land, speak the same 
tongue, and worship after the same ritual. The Russian 
Jews dwell in the same region of a city, the Italians are for 
the most part Catholics, and the Bohemians are Catholic or 
free-thinkers. It follows very naturally that many of these 
local societies are composed of families of the same language 
and religion. The synagogue or church may easily become 
the social center of the organization, and on festival oc- 
casions the place of public worship may witness their 
ceremonies and incidentally advertise their advantages. 

In the city of Philadelphia, in the year 1892, was 
founded the society of the Independent Chevra Kadisho, 



LOCAL RELIEF SOCIETIES 65 

whose purpose was to furnish poor families with money for 
funeral expenses. It has about 3,000 members, each of 
whom pays ten cents each month as dues. There are three 
other societies of a similar character in the city. Mr. Bern- 
heim tells us that the lodges furnish social recreation and 
contribute materially to the elevation of the social condition 
of the residents of a Ghetto. Various branches of the 
brotherhoods extend in every direction and there are few 
families which are not connected with some organization. 
The Ghetto in Chicago contains seventy-five registered 
lodges, of which thirty-two belong to the federation B'rith 
Abraham and twenty to the Western Star, and others to 
less conspicuous unions. In this respect they resemble the 
lodges so popular among their Christian neighbors which 
furnish life insurance to their members and so render an 
important economic service which is the principal ground 
for their existence. Here we see a common tendency to 
federate local lodges into larger societies or brotherhoods, 
a form of union which will be studied more closely in the 
chapter which will follow later on "Fraternal Benefit 
Societies." 

Mutual benefit societies in mercantile and manufacturing 
establishments. Common employment in the same house 
furnishes a canvenient basis for organization of a mutual 
benefit society in a simple and imperfect form. Here again 
the mutual benefit fund is established to avoid dependence 
on charitable appeals. Wherever people come together in 
considerable numbers and with moderate and small incomes, 
a prolonged illness, a serious accident and the extraordinary 
demands of a funeral inevitably start someone to collect 
money to meet the emergency. This instinctive appeal to 
humanity is enforced by the reflection that no one knows 
who may require assistance next. The employer is usually 
asked to contribute to this fund. But the whole arrange- 



66 INDUSTRIAL INSURANCE 

ment is unsatisfactory. The liberal pay relatively much, the 
stingy shirk duty, yet will sometimes make heavy demands 
when trouble strikes them, while the vicious or thriftless 
make special burdens for others. It is found that a regular 
payment provides a fund, even if a small one, that it lasts 
longer than spasmodic charity, that it distributes the burden 
more fairly, and that no one feels himself disgraced by 
taking his share when it becomes necessary. Without at- 
tempting any classification a few examples will illustrate the 
variety of methods and the general tendencies of this type 
of mutual benefit associations. 

The Employees' Mutual Benefit Association of the 
department store of Carson, Pirie, Scott & Co., Chicago, is 
a specimen of this group. This association was founded in 
the year 1895. All employees of the firm are eligible for 
membership. The officers are elected by the members, and 
the element of self-government is strong. The members 
are divided into two classes: (i) Class A, composed of 
those who receive more than $5 weekly wages ; (2) Class B, 
those who receive $5 or less. The initiation fees are $i and 
50 cents, the monthly dues are 35 cents and 15 cents, which 
are collected by the simple process of deducting the dues 
from payments of wages. The sick benefits are $6 or $3, 
according to the class, paid during 6 weeks after the first 
week. The death benefits are $100 or $50, paid out of a 
fund raised by assessments of 25 and 15 cents on the occa- 
sion of a death. In a report of January i, 1906, it is said 
that there were 790 members, an increase from 525 of the 
year before. On April 18, 1906, there were 1,056 members, 
indicating a rapid growth. During the year 1905 the 
expenditures for sick benefits were $3,194; funeral expenses, 
$100; medical attendance, $142.50; costs of administration, 
$75.50; charitable relief, $25. Of the members 394 partici- 
pated in benefits during 1905. The entire expenditures 



LOCAL RELIEF SOCIETIES 67 

since the establishment of the fund had been $20,870.37. 
Membership is voluntary. Significant is the opinion of the 
administrator of this fund based on his observation of its 
value and limitations. He has reached the judgment that 
the success of the fund proves that it is desirable to secure 
sickness insurance at low cost. In order to be successful 
a benefit society must meet all claims promptly after careful 
investigation. What is good for a few must be good for 
all wage-earners, and therefore he recommends that the 
state levy a small tax on all employers according to the num- 
ber of their employees. The premiums should be fixed by a 
competent actuary according to the rates of wages paid. 
From this tax a fund would furnish safer and cheaper 
sickness and invalidity insurance and death benefits than 
could be furnished by fraternal organizations. Branch 
societies could be organized and administered by unsalaried 
officers in each store and factory, and in each office the 
premiums could be collected and the benefits paid out. In 
case of change of employment the employee could be trans- 
ferred to the society of the place to which he goes. The 
only condition of membership would be employment in some 
particular enterprise. One consequence of this arrange- 
ment would be that an employee would rarely desert his 
position without good reason and thus lose his claims by a 
strike or unworthy conduct. Many employers already 
expend considerable sums for charity and for protection 
against strikes which might much more profitably be paid 
out in insurance. The state as well as employers would de- 
rive advantage from this organization because the tendency 
would be to diminish the causes of social disturbance. This 
opinion is given at this point as an indication of the influence 
of practical administration of such funds on a business 
man. Criticism is reserved for a suitable place. 

The Siegel-Cooper Company Employees' Association 



68 INDUSTRIAL INSURANCE 

was organized in Chicago in 1893, and later an association 
was formed among the employees of the house of this firm 
in New York. Only employees of the firm can become 
members of the society. The members are divided into 
four classes according to their rates of wages ; and the con- 
tributions are scaled in the same way: wages per week, 
$2.50 or less, 10 cents monthly dues; wages $2.50 to $5, 
20 cents; wages $5.01 to $9.99, 30 cents; wages $10 and 
over, 40 cents monthly. When the fund falls below $500 
an assessment of 25 cents per member is levied to provide 
means. The benefits received are free medical care and $5 
weekly sick benefits during six weeks for those whose wages 
are over $10 weekly and half wages for the others. In cases 
of chronic disease no benefits are paid. In exceptional cases 
a gratuity of not more than $50 is paid to needy members 
who are sick. Death benefits of $100 in the higher classes 
and $50 in the two lower classes are paid, but lower sums 
in case dues have not been paid a full year. 

The Mutual Aid Association of employees of J. H. 
Williams & Co., Brooklyn, New York, was formed in 1901. 
The members, who are employees of the firm, are divided 
into two classes according as their wages are above or below 
$12 weekly, and the weekly dues are 20 and 10 cents. The 
benefits paid are $11 weekly in the first class and $6 in the 
second class. During the first week of inability to work 
nothing is paid. The member must pay dues six weeks 
before he can receive benefits. During six weeks the per- 
son disabled receives the full benefit and if the sickness 
continues the rate is reduced to one-half and paid for 
twenty weeks. The total amount which one member can 
receive is limited to $176 in the first class and to $96 in the 
second class. A member who leaves the employment of the 
firm after he has paid dues for a full year without having 
drawn upon the fund receives back one-half of the sum he 



LOCAL RELIEF SOCIETIES 69 

has contributed to the fund. The family of a member who 
dies after having paid dues six months receives $50 death 
benefit, and if he has been a member one year the family is 
paid $100. In case of the funeral of a member $5 may be 
expended for flowers, but no other gratuities are permitted. 

The Sherwin-Williams Employees' Mutual Benefit 
Society admits only employees of the firm, and membership 
is voluntary.' The members agree to permit the paymaster 
of the firm to deduct from the weekly wages one cent from 
each dollar due where the wages are under $10. The bene- 
fits cannot exceed one-half the wages of $10, and none are 
paid during the first week of absence from work. Where 
the disability is caused by vice or drunkenness no sick benefit 
is paid. The death benefit is $25. 

The Mutual Benefit Association of the Cleveland Hard- 
ware Co., according to the by-laws of 1901, has two classes 
of members, "Seniors," who are over nineteen years of 
age, and "Juniors," who are under nineteen years. The 
weekly dues are 25 and I2j^ cents, according to the class. 
The senior members receive in sickness $6 for two weeks, 
$5 during twelve weeks, $2.50 per week for the next 
thirteen weeks, and $i per month during the remainder of 
the illness. The period of payment of benefit is limited to 
twenty-six successive weeks in any one year. The Junior 
members receive half as much as the Seniors. At the 
death of a member an assessment of 50 or 25 cents, accord- 
ing to class, is levied. Drunkenness and immorality exclude 
the sick member from participation in the benefits. This 
is an almost universal rule in such associations. It is a rule 
which may be necessary, but it must be examined critically 
as to its justice, for it does not seem fair to accept the dues 
for a long time and then refuse to pay benefits. It would 
seem that at least part of the contributions should be re- 
turned to such persons. The German insurance law formerly 



70 INDUSTRIAL INSURANCE 

contained this rule, but it has been changed. No person 
needs more medical care, even in the public interest, than 
one afflicted with a contagious disease, no matter how it has 
been caused. The necessity for the rule reveals a radical 
and incurable defect in all merely local insurance funds. 

The Brown & Sharp Mutual Relief Association, Provi- 
dence, Rhode Island, was organized September 10. 1886. 
The officers, chosen by the members, are president, vice- 
president, secretary, treasurer, and directors. The president 
appoints visiting committees who visit the sick in order to 
manifest fraternal interest and, incidentally, to prevent 
fraud of malingerers. Membership is open only to em- 
ployees of the firm. Members of the first class, receiving 
over $8 weekly wages, pay 5 cents weekly dues, and mem- 
bers of the second class, receiving less than $8 per week, 
pay 2j cents weekly dues. The dues are collected monthly 
by the secretary. In order to cover unusual drafts on the 
funds an assessment of 50 cents in the first class and 25 
cents in the second class may be levied by the directors, but 
not more than twice in any one year. Higher assessments 
can be laid only by a two-thirds vote of the members. The 
sick benefits are $i and 50 cents daily, according to class, 
paid during thirteen weeks, Sundays not included. A per- 
son must pay dues four weeks before he is entitled to receive 
benefits. Immoral conduct excludes from rights to benefits. 

The Clerks' Benefit Society of Montgomery Ward & 
Co., Chicago, receives a small contribution from the firm. 
Membership is voluntary and there are between four hun- 
dred and five hundred members. A reserve fund of $1,000 
to $3,000 is kept. Members of class A are employees of the 
male sex over eighteen years of age. and female employees 
who are accepted by the board of directors; members of 
class B are male employees under eighteen years of age and 
female employees not eligible for class A. The entrance 




LOCAL RELIEF SOCIETIES 71 

fee is $i and the monthly dues are 50 and 25 cents. The 
weekly sick benefit is $10 or $5, and is paid for thirteen 
weeks beginning with the fourth day of absence from work; 
but benefits may not exceed the wages. When a member 
of class A dies, each member of this class pays an assess- 
ment of $i, and each member of class B pays 50 cents; and 
when a member of class B dies, each member of class A 
pays 50 cents and each member of class B pays 25 cents to 
pay death benefit. The secretary receives $50 yearly for his 
services. 

The Seroco Mutual Benefit Association (employees of 
Sears, Roebuck & Co., Chicago). The employees are 
divided into two classes: class A consisting of those who 
receive weekly wages of $9 or more and class B, those whose 
weekly wages are under $9. The monthly dues are graded 
according to the wages, 10, 20, 30, 40, 50, or 60 cents. The 
assessment to provide benefit on the occasion of a death is 
the amount of dues for one month. Membership is volun- 
tary. Sick benefits are paid according to the wage group, 
after three days for eight weeks : 

TABLE I 



Weekly Wages 


Weekly Sick Benefit 


Death Benefit 


Under $4. . 


$ 2 


S 2- 


$ 4 -$ 6 




CQ 


6- o. . 


6 


7r 


O 12 


8 


ZOO 


12 1C. 


10 


I2C. 


15 and above 


12 


*-*3 

I en 






*3** 



The administration is conducted by a president and the 
other customary officers and five directors who must be 
foremen of the firm. The president of the society sends a 
circular letter to each new employee and advises him to 
become a member of the society and describes the advantages 
it offers. From one of these circulars we may learn some- 
thing of the motives of the organization: 



72 INDUSTRIAL INSURANCE 

In nearly all large institutions where many people are employed, 
and who become closely allied with each other in the daily routine of 
their work, it is customary when a co-worker has the misfortune to 
become incapacitated for work to render him such financial aid as is 
possible by "passing the hat" or raising money by subscription. To 
overcome such conditions in our house the Seroco Mutual Benefit Asso- 
ciation was organized on June I, 1902. A member is not a subject of 
charity, as he pays for what he receives. .... From the standpoint 
of insurance, the rates are much lower than similar insurance can be 
procured from any regular insurance company; furthermore, there is 
no company that will issue a policy covering all the conditions at such 
a small cost as the S. M. B. A. offers, and our society, being con- 
ducted virtually without expense, makes it possible to give its members 
such liberal terms. 

The application for membership includes a statement 
which is intended to show what physical infirmities affect 
the health of the applicant and to exclude those who suffer 
from rheumatism, cancer, heart disease, insanity, consump- 
tion, paralysis, or apoplexy. The association is virtually 
self-supporting and not dependent on contributions from 
the firm. Since May, 1905, no initiation fee has been re- 
quired. The firm supplies free printing and stationer}-, free 
services of the visiting nurses from the hospital department, 
and medical attendance of the physicians in sen-ice of the 
company. Higher officials pay dues but do not receive bene- 
fits from the fund, since their salaries are continued during 
illness. The manager of the society says that his experience 
has taught him that "the laboring classes are not quick to 
discern what is undoubtedly a great benefit to them." 
Since membership is voluntary, only 2,610 out of 7.500 
employees have become members. It is suggested that many 
of them prefer to insure themselves in regular insurance 
companies and with fraternities to which they have social 
attachments. The manager says that at the time of writing 
the expenditures were in excess of receipts, and they were 
considering more stringent rules for the exclusion of per- 



LOCAL RELIEF SOCIETIES 



73 



sons affected by rheumatism and tuberculosis. The manager 
admits the desirability of insurance which has the generality, 
safety, and adequacy of the German methods of private 
insurance associations organized under state laws, which at 
once make insurance obligatory on all and provide means 
for meeting the obligations. But he, like most American 
business men, with the instinctive feeling that government 
is a necessary evil, shrinks from state "compulsion," al- 
though he clearly sees that nothing short of state require- 
ment will ever guarantee needed protection to all wage- 
earners. It is the attitude of the typical American. The 
results of this association are indicated in the report: 

TABLE n 



Yc3. w Hndinz 


Pi;. ez:~ 


Expenditures 


Membership 


May i, IQO* . 


$?,4Oi4.l8 


$ 2,23O.Q3 


O72 


May i 1004. 


<,2OO.7O 


1.747 - 05 


I.I" 


May i, IQOS . 


c ,040.80 


4,137.00 


I.-^C 


May i, 1006 


8,486.80 


6,360.0? 


2.2-^ 










Total 


$23 O4I 48 


$16 48* 83 













These figures indicate a steady growth and considerable 
satisfaction with the administration ; perhaps some pressure 
from the firm. 

The Solvay Mutual Benefit Society, Geddes, New York, 
was organized in 1888, and the by-laws were revised in 
1905. The members elect twelve trustees, and these choose 
the president and vice-president. The treasurer and physi- 
cian are appointed by the firm and are paid by the society. 
The society is not responsible for the payment of the 
sen-ices of physicians other than their own. The members 
must pass a medical examination before being admitted and 
only employees of the firm are eligible for membership. 
The admission fee is 90 cents and the monthly dues 30 cents. 
The employees who earn less than $5 weekly wages pay half 



74 INDUSTRIAL INSURANCE 

the rate and receive half the ordinary benefits. The dues 
and fees are collected by the cashier of the firm who retains 
the amount from the pay-roll in accordance with a previous 
agreement. A new member does not receive sick or accident 
benefits until he has paid dues 90 days. Members who receive 
over $5 weekly have during illness or disability to work on 
account of accident $6 weekly; others receive only half as 
much, and the period of payment of benefits is twenty-six 
weeks. There is no further protection, and nothing is paid 
in benefits during the first week of disability. A member 
sick with smallpox is attended by a physician not connected 
with the society and during his disability is paid his sick 
benefit. If a member is placed in quarantine he is paid his 
benefit, but may not permit visits in his house. A member 
affected by venereal disorders or who is a drunkard is 
excluded from the benefits. The firm makes no direct con- 
tribution to the fund. The death benefit paid to the family 
is $100; the husband being paid $50 for funeral expenses in 
case of the death of his wife. Benefits cease after twenty- 
six weeks. The nurse is paid by the society $i each night 
of service. Extra assessments may be levied on members 
by the vote of two-thirds of the trustees. 

The Estey Organ Co. Benefit Association, Brattleboro, 
Vermont, was organized in 1902. The ordinary yearly dues 
are $i and an assessment of $i may be levied. The firm con- 
tributes to the fund 20 per cent, of the payments made by 
the members. The executive committee has three members 
of whom two are chosen by the employees and one by the 
firm. A sick benefit of $i daily is paid during ten weeks, 
Sundays excepted. A death benefit of $60 is paid to the 
family of a deceased member. 

Allis Mutual Aid Society, Milwaukee, Wisconsin. In 
the introduction to the by-laws we find an explanation which 
is applicable to all organizations of this kind which are 



LOCAL RELIEF SOCIETIES 75 

efforts to escape from charity methods. The founders of 
this society had for their purpose to furnish aid in time of 
need without carrying around a begging list, and to give 
help on the basis of a business contract. The initiation fee 
is 50 cents, the monthly dues 25 cents, and extra assess- 
ments may be levied. Sick benefit, after the first week of 
illness, is 75 cents daily up to 90 days, and gratuitous 
medical attendance is furnished. The death benefit is $100. 
In the report for April 15, 1901, it was shown that $4,- 
204.75 na d been received from members, $3,993-93 from 
the firm, and that $9,026.56 had been expended. 

The Deering Workmen Mutual Benefit Association, Chi- 
cago, required an entrance fee of 50 cents, fortnightly dues 
of 15 cents, and a yearly payment of 10 cents for adminis- 
tration; and also an assessment of 10 cents on the occasion 
of a death or when the fund falls below $150. A sick 
benefit of $5 after the first week during eight weeks is paid, 
or longer by special vote of the trustees. The death benefit 
is $50. 

The Natural Food Co. Relief Association, Niagara 
Falls, New York, collects weekly dues of 5 and 2j^ cents 
according to wage rate, over or under $6.50 per week; and 
the collection is made by deducting the dues from the fort- 
nightly wage payments. The firm contributed as much as 
the members until the fund reached $1,000. An assessment 
of 50 or 25 cents may be levied according to wage class. 
The entrance fee is 50 cents. The sick benefit is a daily 
payment of $i or 50 cents during twelve weeks, after seven 
days, Sundays being excepted. The death benefit in the 
higher wage class is $75 and in the lower $37.50. 

The Employees' Aid Association of the Moline Plow 
Co., Moline, Illinois, is a voluntary organization. Money 
is raised by assessments levied according to demand. Sick 
benefits are paid for twelve weeks after the first week, and 



76 INDUSTRIAL INSURANCE 

not more than $50 death benefit. In the report for the year 
ending January 2, 1906, it was said there were 513 members, 
121 orders on the treasurer, 16 regular and 2 extra assess- 
ments, and $1,865 benefits paid out. 

In the Deere & Co. Employees' Association, Moline, 
Illinois, membership is voluntary; the executive committee 
is elected by the members who are divided into two classes, 
the Senior whose wages are over $7 weekly, and the Junior 
who receive less than $7. The entrance fee is 25 cents; the 
assessment for paying indemnity is 25 or 15 cents. The 
weekly sick benefit is $5 or $3 weekly, after the first week, 
during twelve weeks; the funeral payment is $25 or $15. 
The report of December 9, 1905, mentions 582 members, 
9 payments of funeral benefits, and 100 cases of aid to the 
sick. The average cost per member was $3 and the total 
expenditures for the year $2,041.80. The firm contributed 
$250 to the fund. 

Gas Company Mutual Aid Society, New York. Only 
employees of the corporation under forty-five years of age, 
after medical examination, can become members. The 
mortuary fund must be invested either in federal, state, or 
municipal bonds, or in mortgages. Each member pays an 
entrance fee for medical examination of $2, yearly dues of 
50 cents for costs of administration, and monthly dues of 
50 cents. The death benefit is $300. If a member leaves 
the employment of the corporation, he receives back all he 
has paid into the mortuary fund. There is a Friendly Aid 
Society of employees whose members pay monthly dues 
of 30 cents and receive in sickness, after five days, $6 weekly 
during twelve weeks. 

Osborne Relief Association, Auburn, New York, now a 
branch o>f the International Harvester Company. This 
society of employees was organized in 1878. In the first 
class, where wages are over $i per day, the monthly dues 



LOCAL RELIEF SOCIETIES 77 

are 50 cents, while those in the lower wage class pay 25 
cents. The weekly benefit in case of illness or disability 
caused by injury is $6 during two weeks and afterward $4 
during twelve weeks ; only by consent of the executive com- 
mittee may the sick benefit be granted for a longer period. 
The death benefit is $ioo. 1 

The Mutual Aid Society of the McCormick Reaper 
Factory, Chicago, was organized in 1882. Employees of 
the firm, between eighteen and forty-five years of age, sound 
in body and mind, and moral in conduct, are eligible to 
membership. The entrance fee for new members is ordi- 
narily $3, but for those over 40 years and under 45 years it 
is $5. The quarterly dues are $i. Fines are imposed on 
members or officers of the society for the neglect of their 
duties. Assessments are levied to keep up the fund. 

After the second week a weekly sick benefit of $5 is 
paid during twenty-six weeks in the same year. A member 
placed in quarantine is paid his sick benefit. The funeral 
benefit is $50. The by-laws are printed in both German 
and English, as many of the members are Germans. This 
is a significant fact in many localities, for the Germans 
generally are aware that in their fatherland the methods 
of insurance are vastly superior to those in this country, 
and they are quietly but steadily creating a public sentiment 
in favor of better plans. 

The Garden City Sick Benefit Association of the painters 
in the Deering Works, Chicago. A new member pays 30 
cents for entrance fee and must submit to a medical exam- 
ination. When a member dies or his wife dies an assess- 
ment is levied for the fund. Sick benefits of $5 are paid 
during thirteen weeks, unless the cause of the illness is vice 

1 These schemes are to be supplemented by a larger system which 
will be noticed in chapter vii. They are mentioned here as illustrations 
of a stage of transition to a better place. 



78 INDUSTRIAL INSURANCE 

or drunkenness. The funeral benefit in case of the death 
of a member or a member's wife is $50, and $10 are granted 
for flowers for the funeral. 

The Adams & Westlake Employees' Benefit Association, 
Chicago, was organized in 1888. A representative of the 
company administers the fund and membership is obligatory 
on all employees. All new employees must sign a contract 
as a condition of employment. Here as in some other cases 
we discover that "compulsory insurance" is not, as some 
claim, foreign to the American mind, when common-sense 
shows that it is a condition of efficient working of the plan ; 
but compulsion by employers is apt to be more unfair than 
compulsion by law. The entrance fee in this association is 
50 cents, or 25 cents for the lower wage class ; the dividing 
line between the two classes being the rate of more or less 
that I2j^ cents per hour. The monthly dues are 25 or 15 
cents; the weekly sick benefit is $6 or $3.90, after the first 
week, during three weeks; and the death benefit is $50 or 
$30. The report for the year ending December 31, 1905, 
shows receipts, including $150 from the company, of $1,976. 
The expenditures were in ninety-six cases of sickness and 
two of death, $1,363.00. In 1906 the receipts were doubled. 

The Silversmiths' Beneficial Society, Providence, Rhode 
Island, was organized by the employees of the Gorham 
Manufacturing Co. in 1889. The administration is con- 
ducted by elected representatives of the membership. The 
physician receives $2 annually from each member, payable 
quarterly from the fund. The monthly dues are $i ; the 
weekly sick benefit, during the first week, is $5 and during 
the following thirteen weeks $10, then during twelve weeks 
it is $5. The treasury pays the fees for surgical or medical 
treatment. At the end of the year all the money in the 
treasury is divided among the members. The membership 
reported was 397, and the expenditures during 1905 were 



LOCAL RELIEF SOCIETIES 79 

$2,397. The Silversmiths' Mutual Aid Society was organ- 
ized in 1865, has 670 members, and paid out in 1905, 
$6,112. The weekly dues are 20 or 12 cents according to 
wage class; sick benefits, $4 for the first week, $8 during 
thirteen weeks, and then $4 during disability. The death 
benefit paid is $40. In the second class half the rate of 
benefits prevails. The Gorham Manufacturing Company 
does not contribute to the fund of the association, but has 
its own pension fund. 

The Elgin National Watch Co. Employees' Aid Fund, 
Elgin, Illinois. The object of this society is to provide sick, 
accident, and death benefits for employees of the company. 
The managers have an agreement with the society under 
which the company pays about $5,000 each year to the fund, 
or about half the amount paid by the employees. Member- 
ship is voluntary, and the management rests with officers 
elected by the society itself. The men pay 25 cents and the 
women 15 cents monthly dues, and these dues are collected 
by the cashier of the firm by deductions from the pay-roll 
in accordance with the contract. The benefit paid after the 
first week during six months is $i per day, and for women 
60 cents; the death benefit is $50. The reserve fund may 
not fall below $3,000 nor rise above $5,000. 

Quite similar arrangements are found among the em- 
ployees of the Atlas Works, Indianapolis, Indiana, and of 
T. B. Laycock Manufacturing Co., in the same city, and 
with the National Cash Register Co., of Dayton, Ohio, and 
Halle Bros., Cleveland, Ohio. Indeed, only a thorough 
investigation by the agents of the national government can 
adequately present the statistics of the numerous associa- 
tions of this kind found in all parts of the nation. 

Some of the street railway companies favor and aid the 
mutual benefit associations of their employees, although 
these societies have an independent and self-supporting 



8o INDUSTRIAL INSURANCE 

existence. Thus there is the Chicago City Railway Em- 
ployees' Mutual Aid Association, which was organized 
September 26, 1894. Any employee of the corporation 
may become a member after medical examination and pay- 
ment of an entrance fee, if under fifty years of age. Any 
member may continue to retain his claim for benefits after 
leaving the employment of the company if he pays his dues, 
but he is not permitted to become a bartender or saloon- 
keeper. Any member who drinks alcoholic liquors to excess 
is first warned, and if he persists is expelled. The society 
elects directors and they choose the president, vice-president, 
and medical examiner. The dues are 50 cents a year and 
assessments are levied to cover the expenditures. The 
contributions are collected by the cashier of the company 
who deducts the amounts from wage payments and pays 
over the amount to the treasurer of the society. The death 
benefit is $500, whether the cause of death is accident or 
sickness. 

Defects and limitations of the local mutual aid associa- 
tions. The principal evil in connection with these voluntary 
local societies is that they are generally organized and 
administered without the aid of competent actuaries and 
are utterly without scientific foundations. A new society 
copies the by-laws of an older society without any kind of 
understanding of the probable outcome of the plan. The 
state, which is just now so solicitous for the life insurance 
arrangements of rich insurers who are able to take care of 
their own interests, totally neglects these obscure, but well- 
meaning, insurance societies of the workingmen. For this 
reason many of the local societies are deprived of that 
scientific guidance which they so greatly need in order to 
make them safe and economical, and adapt their tariffs to 
age, sex, and conditions of employment. Usually the offi- 
cers of the societies are honest, and even if they were thieves 



LOCAL RELIEF SOCIETIES 8 1 

there would not be much to steal ; at best they are without 
business knowledge and without acquaintance with actuarial 
requirements. Membership is purely voluntary in most 
cases, and the claims of members rest on no legal protection. 
There is no bond of connection, no federation, no system 
covering a large territory. An epidemic which prevails in 
a shop or neighborhood destroys the fund when it is most 
needed. If the officers are untrue to their trust they can 
be reached only through a tedious process, and it is cheaper 
to let them run away. The local society is, in respect to the 
state, an independent organization, not a part of a great 
body in which the union of members makes each secure. 
If a member moves from one place to another, he loses his 
insurance and all his rights. It is sometimes argued that 
we cannot have state insurance in the United States because 
our working population is so mobile; a moment's reflection 
will turn this fact into an unanswerable argument for com- 
pulsory insurance on the widest scale possible. Just because 
the wage-earners are so fond of going from place to place, 
just because they are forced by the rapid fluctuations and 
changes in industry to pass from employer to employer, 
is a general system desirable and even necessary to genuine 
insurance. No doubt these societies are serving a good 
purpose in slightly mitigating the sufferings of families in 
distress; they are a little better than taking up collections; 
but they remain still on the borderland of charity, with 
much of the injustice, hardship, and uncertainty of depend- 
ence on gifts. Their best permanent service is to educate 
the nation to a sense of obligation to provide an adequate 
system of insurance for all citizens. 

There is positive injustice in the arrangement whenever 
the burden of accident insurance is thrown on these local 
shop associations without substantial contributions of at 
least half the cost from the employers ; for in such arrange- 



82 INDUSTRIAL INSURANCE 

ments the modern principle of risque profession/net is com- 
pletely ignored, and the workmen are compelled to bear 
unaided the cost of production which arises from injuries 
due to the industry. 

Thus far neither employers nor workmen in this country 
have given much consideration to this aspect of the situa- 
tion, and therefore the moral sense has not been wounded. 
But in no other great nation has this principle been so 
thoroughly set at naught as with us where the risks are 
greatest. It is altogether incredible that this injustice will 
long remain hidden, and the discussions of the last years 
have placed it in clearer light than ever before in our history. 

It is to be hoped that the noble revelation of Miss Jane 
Addams will speedily help to work the cure of the disease 
which she describes: 

In a Republic founded upon a revulsion from oppressive govern- 
ment we still keep the police close to their negative role of preserving 
order and arresting the criminal. The varied functions they perform 
in Germany would be impossible in America, because it would be hotly 
resented by the American business man who will not brook any 
governmental interference in industrial affairs. The inherited instinct 
that government is naturally oppressive, and that its inroads must be 
checked, has made it a matter of principle and patriotism to keep the 
functions of government more restricted and more military than has 
become true in military countries. 

And then she pleads for the union of local pride in asso- 
ciated effort for the common good with patriotism itself 
and describes the genuine joy of immigrants in their societies 
of insurance, imperfect as we have seen they are. 

Almost every Sunday in the Italian quarter in which I live various 
mutual benefit societies march with fife and drum and with a brave 
showing of banners, celebrating their achievement in having surrounded 
themselves by at least a thin wall of protection against disaster, upon 
having set up their mutual good will against the day of misfortune. 
These parades have all the emblems of patriotism; indeed, the asso- 
ciations present the primitive core of patriotism, brothers standing by 



LOCAL RELIEF SOCIETIES 83 

each other against hostile forces from without. I assure you that no 
Fourth of July celebration, no rejoicing over the birth of an heir to 
the Italian throne, equals in heartiness and sincerity these simple cele- 
brations. Again one longs to pour into the government of their adopted 
country all this affection and zeal, this real patriotism. A system of 
State insurance would be a very simple device and secure a large 
return. 3 

The state might well accept this genuine product of ele- 
mentary patriotism, these little groups of brave pioneers, 
adopt their societies into a great and powerful system cover- 
ing the land, and at the same time retain all the advantages 
of self-government in small societies in which men gain 
their best preparation for participation in the larger affairs 
of political action. 

2 Newer Ideals of Peace, pp. 90, 91. 



CHAPTER III 
BENEFIT FEATURES OF THE TRADE-UNIONS 

In the United States, according to a recent list, there are 
in affiliation with the American Federation of Labor 113 
national and international unions, organized in 28,681 lodges 
or local unions. The total membership was estimated at 
1,500,000, but this estimate was not based on reliable sta- 
tistics, and it is well known that the number of members 
fluctuates, sometimes rapidly, with changes in economic 
conditions. The accompanying table represents the names 
of the unions, their membership, and their total expenditures 
for various kinds of insurance for the year IQO5. 1 

American Federation of Labor (local organizations) 28,600 

Actors' National Protective Union of America 1,100 

Bakery and Confectionery Workers' International Union of 

America 12,000 

Barbers' International Union, Journeymen 22,700 

Bill Posters and Billers of America, National Alliance 1,400 

Blacksmiths' International Brotherhood 10,000 

Blast Furnace Workers and Smelters of America 1,500 

Boiler Makers and Iron Ship Builders of America 13,400 

Bookbinders' International Brotherhood 6,600 

Boot and Shoe Workers' Union 32,000 

Brewery Workmen, International Union of 34,000 

Brick, Tile and Terra-Cotta Workers' Alliance, International 4,100 
Bridge and Structural Iron Workers, International Associa- 
tion of 10,000 

Broom and Whisk Makers' Union, International 1,000 

Brushmakers' Union, International 700 

Building Employees of America (in January, 1904, 800) .... 

Cap Makers of North America, United Cloth Hat and 2,600 

Carpenters and Joiners of America, United Brotherhood of.. 143,200 

1 Bulletin of the Department of Labor (New York, 1906), p. no; 
Chicago Daily News Almanac, 1906, pp. 114-16. 

84 



BENEFIT FEATURES OF THE TRADE UNIONS 85 

Carpenters and Joiners, Amalgamated Society of 4,800 

Carriage and Wagon Workers, International 3,200 

Car Workers, International Association of 5> 

Cement Workers, American Brotherhood of 3>6oo 

Chainmakers' National Union of the United States of America 600 

Cigarmakers' International Union of America 41,400 

Clerks' International Protective Association, Retail 50,000 

Clerks, International Association of Railway (in January, 

1904, 600) 

Compressed Air Workers, International Union 1,200 

Coopers' International Union of North America 5,6oo 

Curtain Operatives of America, Amalgamated Lace 700 

Cutting Die and Cutter Makers' International Union 300 

Electrical Workers of America, International Brotherhood. . 21,000 

Elevator Constructors 2,200 

Engineers' International Union, Steam 17,500 

Expressmen, Brotherhood of Railway (in January, 1904, 300) 

Firemen, Stationary 12,200 

Flour and Cereal Mill Employees 9 

Foundry Employees 1,000 

Freight Handlers and Warehousemen's Union 3,400 

Fur Workers 400 

Garment Workers of America 31,900 

Garment Workers' Union, Ladies' 1,800 

Glass Bottle Blowers' Association 7,000 

Glass House Employees 200 

Glass Snappers' Protective Association, Window 1,200 

Glove Workers' Union 1,100 

Gold Beaters' Protective Union 300 

Granite Cutters' National Union 10,300 

Hatters of North America, United 8,500 

Hod Carriers' and Building Laborers' Union 4,7OO 

Horseshoers' Union, Journeymen 4,200 

Hotel and Restaurant Employees' Alliance and Bartenders' 

League 38,700 

Insulators and Asbestos Workers 300 

Iron, Steel and Tin Workers, Amalgamated Association of.. 10,000 

Jewelry Workers' Union 7 

Knife Grinders' Union Table 300 

Knife Blade Grinders' and Finishers' Union, Pocket 200 



86 INDUSTRIAL INSURANCE 

Lathers' International Union, Wood, Wire, and Metal 4,300 

Laundry Workers' Union, Shirt, Waist and 4,600 

Leather Workers on Horse Goods 4,000 

Leather Workers' Union, Amalgamated 1,000 

Longshoremen's Association 47,800 

Machinists, International Association of 48,500 

Maintenance-of-Way Employees, International Brotherhood of 12,000 

Marble Workers' Association 1,900 

Mattress Spring and Bedding Workers' Union 1,500 

Meat Cutters and Butcher Workmen 6,200 

Metal Polishers, Buffers, Platers and Brass Workers 10,300 

Mine Managers and Assistants' Mutual Aid Association 400 

Mine Workers of America, United 261,900 

Molders' Union, Iron 30,000 

Musicians, Federation of 30,800 

Oil and Gas Well Workers 400 

Painters, Decorators and Paperhangers, Brotherhood of 54,200 

Paper Box, Bag and Novelty Workers' Union 900 

Paper Makers, United Brotherhood of 5,ooo 

Pattern Makers' League 3,6oo 

Pavers and Rammermen, Union of 1,000 

Paving Cutters' Union 1,300 

Photo-Engravers' Union 2,200 

Piano and Organ Workers' Union 9,000 

Plumbers, Gas Fitters, Steam Fitters, Helpers' Association... 15,000 

Potters, Operative 5,6oo 

Powder and High Explosive Workers 500 

Print Cutters' Association 400 

Printers and Color Mixers, Association of Machine 400 

Printers' Association, Machine Textile 400 

Printers' Union, Steel and Copperplate 1,100 

Printers' Association 200 

Printing Pressmen's Union 17,000 

Roofers' Union, Slate and Tile 600 

Quarry Workers' Union 3,600 

Rubber Workers' Union 100 

Sawsmiths' Union 300 

Seaman's Union 19,500 

Sheet Metal Workers' Union 13,000 

Shingle Weavers' Union 1,600 



BENEFIT FEATURES OF THE TRADE UNIONS 87 

Shipwrights, Joiners, and Calkers 2,400 

Slate Workers 900 

Spinners' Cotton Mule Union 2,200 

Stage Employees' Alliance, Theatrical 5,5OO 

Stereotypers' and Electrotypers' Union 2,800 

Stove Mounters' Union 1,500 

Street and Electric Railway Employees' Association 30,000 

Tack Makers' Union 200 

Tailors' Union, Journeymen 16,000 

Teamsters' Brotherhood 78,300 

Telegraphers, Order of Railroad 15,000 

Telegraphers' Union, Commercial 2,000 

Textile Workers, United 10,000 

Tile Layers and Helpers' Union, Ceramic, Mosaic and Encaustic 1,400 

Tin Plate Workers' Protective Association 1,400 

Tobacco Workers' Union 5,400 

Travelers' Goods and Leather Novelty Workers' Union... 1,300 

Typographical Union 46,700 

Upholsterers' Union 2,800 

Watch Case Engravers' Association 300 

Weavers' Association, Elastic Goring 100 

Wire Weavers' Protective Association 300 

Wood Carvers' Association 1,600 

Woodsmen and Saw-Mill Workers' Brotherhood 1,100 

Wood Workers' Union, Amalgamated 20,000 



Total membership 1,494,300 

During the year 1905 the national unions of the Ameri- 
can Federation of Labor paid out in benefits as follows : 

Death benefits $ 742,421.23 

Death benefits (widows) 24,800.00 

Sick benefits 582,874.13 

Traveling expenses 62,989.71 

Insurance of tools 5,180.41 

Out-of-work benefits 85,050.72 



Total $1,503,316.20 

* 

But these figures do not by any means represent the 



88 INDUSTRIAL INSURANCE 

expenditures and services of the unions, because the local 
lodges assist with their funds and care, very often without 
reporting to or acting through the national officers. Of 
much of this kind of service we have no records. 

Accident insurance of the trade-unions. A few ex- 
amples of methods described in the letters from secretaries 
and in the annual reports and by-laws will serve to explain 
the working of this kind of insurance in the unions. The 
Amalgamated Society of Carpenters and Joiners pays a 
lump sum of $700 in case of complete disability, and from 
$175 to $350 in case of partial disability. From the year 
1860 to 1904 this organization paid out in accident-insur- 
ance benefits $335,825. The Cigarmakers' Union pays a 
lump sum when a member has become blind or lost both 
hands. The Iron Moulders' Union pays to the partially 
disabled workman from $100 to $200, and to the totally 
disabled member a sum which is determined by the adminis- 
trators of the fund according to circumstances. In the 
Amalgamated Association of Street and Electric Railway 
Employees the injured member receives $100. The Inter- 
national Brotherhood of Maintenance-of-Way Employees 
pays in case of total disability from $500 to $1,000. The 
Amalgamated Glass Workers pay in case of permanent 
disability from $75 to $100. So far as we can draw con- 
clusions from correspondence with the unions in affiliation 
with the American Federation of Labor, it must be said that 
they have rarely achieved important results in the field of 
accident insurance. The tables of statistics furnish, it is 
true, only a part of the facts; perhaps a considerable part of 
the expenditures credited to sickness insurance and death 
benefits is really accident insurance. Disability for labor, 
prolonged illness, and death are not infrequently the results 
of accidents of occupations or of other causes. There are 
some special reasons for the reluctance of the unions to take 



BENEFIT FEATURES OF THE TRADE UNIONS 89 

up accident insurance. It seems probable that many mem- 
bers of the unions hesitate to pay premiums into a common 
treasury for this purpose, for fear the money might be 
expended upon strikes. Further, the traditional law of 
employers' liability has educated the workmen to expect 
their protection from the awards of courts. This hope is 
generally illusory; but the occasional enormous awards 
awaken a gambling instinct in thousands of persons where 
only one will receive substantial indemnity by prosecuting 
the employer. The workmen in certain dangerous occupa- 
tions, especially some of the railway employees, enjoy the 
protection of the relief departments as well as of their union 
benefits. Well-paid workmen in .dangerous trades can se- 
cure accident insurance by paying relatively high premiums 
in casualty companies, or they can make special contracts 
with private hospitals to furnish medical care during illness, 
a frequent rate of payment being $10 to $12 a year for 
assurance of such relief in hospital or at home. In certain 
localities the employers have become accustomed to paying 
the costs of medical care, and at least part of the wages, 
when the accident was due to mishap in the industry itself. 
All these causes co-operate to diminish the interest of work- 
men in their union accident benefit, and they are much more 
likely now than in former years to regard the organization 
of such insurance as a duty to be laid upon the business 
which causes the risks. The doctrine of risque professionnel 
is very rapidly gaining adherents in this country. 

Sickness insurance of the unions. If we turn to sick- 
ness insurance, we are upon ground where the local unions 
are found to be admirable organs of administration. The 
members of a lodge are exposed to similar risks, they resem- 
ble each other in physical nature, they know each other's 
habits, they are able to detect imposture and to manage 
the simple affairs of a form of insurance which does not 



go INDUSTRIAL INSURANCE 

require heavy reserves and large investments of funds. 
Therefore it is that there are very few organizations 
for sick insurance directly by national trade-unions, but 
very many among the local lodges of the national bodies. 
At the same time we have not adequate statistics of the 
extent of this insurance, because the lodges are not required, 
as a rule, to report their work in this field to the central 
office. Sometimes we read in the reports and correspondence 
the statement that the members of the unions seek their 
sick insurance in the fraternal societies which are to some 
extent in rivalry with the unions. The members of a union 
in this country have been taught by circumstances and by 
discussions to regard their trade organization as militant, 
as an army to wrest concessions from employers in relation 
to wages, hours, and conditions of employment, while the 
more pacific and constant needs of sociability and provident 
thrift may be met in other ways. In new unions the leaders 
find it very difficult to induce members to set the dues high 
enough to cover more than the bare costs of administration 
and war. Our unions have not been so long established as 
those of Great Britain, and have not yet settled down as 
permanent organizations with varied ends ; and their fluctua- 
ting membership composed of men of all nationalities, 
have only imperfectly learned as yet how to trust each other 
and maintain large funds under the control of leaders who 
sometimes betray them. Many of the members of unions 
are connected with powerful church orders, whose funds 
furnish means in sickness and brotherly attention in trouble. 
After making deductions for all these reasons, there still 
remains a very important work of sickness insurance in the 
hands of the lodges of trade-unions. Of these we may cite 
certain typical examples, although complete records are not 
available. 

In the United Brotherhood of Carpenters and Joiners 



BENEFIT FEATURES OF THE TRADE UNIONS 91 

sick benefits are provided by local lodges without interfer- 
ence from the national officers. The International Associa- 
tion of Machinists reports 200 lodges, and during the year 
1905 they paid out in sick benefits the sum of $26,617.43. 
Some of the lodges of the Carriage and Wagon Workers' 
International Union have a sick-benefit feature, but this 
is not general in this organization. Very peculiar and inter- 
esting is the method of Union No. 144 of the Cigarmakers' 
Union in the city of New York. The members pay monthly 
dues of 25 cents, and one who is disabled by illness is paid 
$5 a week during 13 weeks. If a surplus remains in the 
treasury after paying benefits, it is divided at Christmas 
among the members. The union is composed of auxiliary 
associations, each having from 25 to 30 members. In the 
Amalgamated Society of Carpenters and Joiners the sick 
benefit is $4.20 weekly for 26 weeks, and afterward $2.10 
per week; the younger members pay half -rates and receive 
half -benefits. The entire sum expended for sick insurance 
during the years 1860 to 1904 was $3,446,465, and in 
addition to this $233,170 were expended in special relief. 
The Iron Moulders' Union of North America designates 
8 cents of the weekly contribution of each member to the 
sick-benefit fund, and out of this fund a sick member 
receives $5.25 per week after the first week during 13 weeks. 
The United Association of Journeymen Plumbers, Gas 
Fitters, Steam Fitters' Helpers pays weekly benefits of $5 
for 13 weeks, after 7 days. The Tailors' Union pays the 
men in case of illness $4 a week, and the women $3. In 
the year 1904 the 61 divisions of the Amalgamated Associa- 
tion of Street and Electric Railway Employees of America 
paid out $20,002.73, the rates of benefits ranging from $2 
to $7 weekly. The Journeymen Barbers receive $5 weekly 
during 20 weeks. The Tobacco Workers have a sick benefit 
of $3 weekly for 13 weeks, after 7 days, on condition that 



92 INDUSTRIAL INSURANCE 

the person at the time of illness has already paid contribu- 
tions during 6 months. The Boot and Shoe Workers' 
Union pays $5 weekly for 13 weeks after 7 days. 

Old-age and invalidism insurance. While the direct 
provision for old-age insurance is rare among the trade- 
unions, it is probable that other benefits occasionally cover 
the wants of members who are too feeble or aged to work 
steadily. It is just this class of members who would be 
most severely tempted to work for lower than union rates 
of wages if they were not protected by benefits. The 
Cigarmakers' Union expends a great deal of money on out- 
of-work benefits, and the managers of this fund inform us 
that a large number of the recipients of this relief are infirm 
persons who cannot earn the average wages, and that many 
of these are advanced in years. Here we have the begin- 
nings of old-age pensions concealed under other forms of 
insurance. The Granite Cutters* Association has begun to 
organize its old-age pension fund. The Fraternal Associa- 
tion of Machinists has approved a system under which it is 
proposed to pay to a member on reaching the age of 65 
years the sum of $500, if he has already paid dues as mem- 
ber during 10 years. But the money for establishing the 
scheme was not in hand at last report. The United Associa- 
tion of Journeymen Plumbers offers an old-age pension of 
$300 after a person has been a member for 20 years, of 
$400 after 25 years, and of $500 after 30 years. The Amal- 
gamated Association of Street and Electric Railway Em- 
ployees accepted a plan in 1905 according to which any 
member over 65 years of age would receive from $i to $3 
per day; but the fund is not yet provided. The Amalga- 
mated Society of Carpenters and Joiners pays to the aged 
member weekly from $2.45 to $2.80. This union has thus 
paid, during the years 1860 to 1904 the sum of $1,273,915. 
The Amalgamated Society of Engineers, a union of Eng- 



BENEFIT FEATURES OF THE TRADE UNIONS 93 

lish origin, pays old-age pensions. The Pattern Makers' 
League of North America has adopted the plan of paying 
old-age pensions after the year 1920. 

A diligent and extended correspondence has thus far 
.-Jed only the feeble beginnings of care for old age and 
for permanent invalids. So far as the past gives evidence, 
we most look in an entirely different direction for this form 
of protection; although under suitable legal conditions the 
machinery of the unions may become useful in building up 
a system of old-age pensions. 

Death bwfits.In the field of so-called "life-insur- 
ance," or, more properly, the provision for burial benefits 
and some moderate fund for widows, the trade-unions have 
been most successful Usually the effort does not go beyond 
securing money for the expenses of the last illness and the 
burial expenses, and in this the success has been worthy 
of mention; for many thousand families have been spared 
the misery of depending on alms at such trying times in 
their history. In most of the unions a lump sum, which 
rarely exceeds $100, is paid on the death of a member; 
but in some of the stronger unions, whose members enjoy 
high wages, the benefit is larger. 

JThe International Shingle Weavers* Union requires 
monthly dues of 40 cents per member, and the death benefit 
is $75. J])e United Brotherhood of Carpenters and Joiners 
pays $100 to $200 at the death of a member, and $25 to $50 
in case of the death of the wife of a member. There is a 
class of members called "semi-beneficiary" who receive $50 
funeral benefit The monthly dues of the Granite Cutters 
are $i, and the death benefit varies according to classes of 
members. The union of Wood, Wire and Metal Lathers 
pays a funeral benefit of $50 to $ioa In the city of Chi- 
cago the local lodges of the Elevator Constructors pay a 
funeral benefit of $120, which they raise by means of an 



94 INDUSTRIAL INSURANCE 

assessment. The union of Bridge and Structural Iron 
Workers collects monthly dues of 35 cents, and pays a death 
benefit to the family of $100. The Slate and Tile Roofers, 
with monthly dues of 13 cents, pay $100 death benefit. The 
Amalgamated Society of Carpenters and Joiners pays $84 
on the occasion of death of a member, and $35 at the death 
of the wife of a member. During the years 1860 to 1904 
this union paid out in death benefits $617,905. The Associa- 
tion of Machinists pays from $50 to $200. The members of 
the Stove Mounters and Steel Range Workers pay monthly 
dues of 5 cents, and also an assessment at the death of a 
member; but under this plan the promised death benefit of 
$100 is not entirely covered. The death benefit in the Na- 
tional Amalgamated Association of Iron and Steel and Tin 
Workers amounts to $100; the contributions are 10 cents, 
paid quarterly, and a general fund is maintained. The mem- 
bers of the union of Iron Moulders pay 10 cents weekly 
into a fund and 16 per cent, of the proceeds is set apart for 
the death-benefit fund, and the family receives according to 
graded scale from $100 to $200. The Metal Polishers, 
Buffers, Platers, Brass Moulders, and Brass and Silver 
Workers pay $50 to $100 death-benefit fund, and the 
family receives according to graded scale. Some of the 
local lodges of the Carriage and Wagon Workers' Union 
pay death benefits, but not the majority of them. The 
Journeymen Plumbers, Gas Fitters, Steam Fitters and 
Steam Fitters' Helpers pay $100 death benefits, and the 
same sum is paid by the Elastic Goring Weavers and the 
Electrical Workers. At a cost of 70 to 74 cents' annual 
contribution from each member the Journeymen Tailors 
are able to pay a death benefit of $25 to $100. Some of the 
local lodges of the United Garment Workers pay funeral 
benefits. The members of the Amalgamated Association 
of Street and Electric Railway Employees contribute 5 



BENEFIT FEATURES OF THE TRADE UNIONS 95 

cents monthly dues, and a funeral benefit of $100 is paid 
the family of a deceased person. During the year 1904 the 
expenditures of 22 local unions for death benefits in 152 
cases were $6,949.25, and of the national organization 
$15,850. The monthly dues in the International Brother- 
hood of Maintenance-of-Way Employees are 50, 60, 75 
cents, according to age, and the life-insurance policy prom- 
ises $500. The Photo-Engravers' Union, which has few 
members, paid out during the year 1905 to n families 
$825 in death benefits. The members of the Alliance of 
Theatrical Stage Employees pay yearly premiums of $3, 
and in case of a death the family receives $100. The Watch 
Engravers' Association pays a benefit not to exceed $75, 
which is raised by levying an assessment of 50 cents after 
each death. A small sum for funeral expenses is paid by 
local lodges of the National Print Cutters' Association. The 
monthly dues in the International Typographical Union are 
7^/2 cents, and the local lodges pay $70 funeral expenses. 
In the year 1905 this union paid out $39,690, and since 1892 
in all $367,995. The death-rate is said to be 12 per 
thousand. Most of the local lodges of the Coopers' Inter- 
national Union pay funeral expenses. The Glass Workers' 
Association take out of their common fund $50 to $75 for 
funeral expenses; during the year 1905 there were 9 deaths, 
and the sum expended was $600. The death benefits in the 
union of Piano, Organ, and Musical Instrument Workers 
are $50, $100, or $200, according to class. The members 
of the Amalgamated Meat Cutters' and Butcher Workmen's 
Union pay monthly dues of 5 cents, and the death benefits 
are $50 to $100. The Journeymen Barbers expend for a 
funeral or for life insurance $60 to $500. The funds of the 
Bakery and Confectionery Workers are raised by monthly 
dues of 50 cents and by levying occasional assessments. At 
the death of a member the widow receives $50 to $150, and 



96 INDUSTRIAL INSURANCE 

at the death of the wife of a member he receives $25, $50, 
or $75, according to class. The weekly dues of the Brother- 
hood of Leather Workers on Horse Goods are 25 cents, and 
twice in the year an assessment of 50 cents is levied; the 
death benefit varies between $40 and $100. Local lodges of 
the Federation of Musicians pay for funeral benefits from 
$25 upward. The Hotel and Restaurant Employees and 
Bartenders pay 5 cents monthly dues, and the death benefit 
is $50 to $100. Between February 23, 1903, and May i, 
1905, this union paid out $48,650 for death benefits. The 
Tobacco Workers' Union pays $50, and the Paving Cutters' 
Union $75. Each member of the Boot and Shoe Workmen 
pays 50 cents into the fund at the death of a member. The 
death benefit is from $50 to $100. In the year 1905 the 
expenditures were $16,175. 

The union of cigarmakers deserves special attention in 
this connection because its organization and success have 
been so remarkable. This union was founded in 1864, an< 3 
its insurance scheme was introduced in 1879. I ts record and 
statistical reports during the past 26 years have been care- 
fully kept, and its presentation of results is complete and 
accurate. Between the years 1865 and 1904 the number of 
members rose from 984 to 41,536. The union is built up 
out of local lodges, all of which recognize the international 
union and send elected delegates to the general conventions 
of the national organization. Even the officers of the inter- 
national society are elected by a majority of votes of mem- 
bers. Any cigarmaker may belong to the union, with the 
exception of Chinese laborers and working men or women 
in tenement-house shops. An applicant for membership is 
received upon his own statement after payment of an 
entrance fee. Applicants who are suffering from chronic 
diseases, or who are more than fifty years of age, may be 
received into membership and pay 15 cents weekly dues, 



BENEFIT FEATURES OF THE TRADE UNIONS 97 

but are not entitled to sick benefits >nor to more than $50 
death benefits. Only a minority of cigarmakers are mem- 
bers of the union, and therefore the insurance plan does \ 
not protect the greater number engaged in this trade. The 
entrance fee is $3, which may be paid in 6 weekly instal- 
ments. The regular dues are 30 cents a week, which is 
paid into the treasury of the local lodges. A member may 
be excused from payment of dues for 16 weeks of unem- 
ployment, but must repay the amount in arrears after he 
secures employment. A member who has paid dues for 3 
years can receive a card, by means of which he is authorized, 
by paying 20 cents weekly dues, to retain his claim to sick 
and death benefits, even if he is no longer in the trade. The 
benefits are as follows : In case of a strike or lockout the 
unemployed workman receives during the first 16 weeks 
$5 per week, and afterward $3 per week until employment 
is resumed. In case a member is compelled to seek work 
in a distant place he may obtain an advance of $8 to $20 to 
cover expenses of travel. When he secures employment 
he must begin at once to repay the loan in instalments of at 
least 10 per cent, of the amount. A member who for 
2 years has paid his dues is entitled to receive during unem- 
ployment $3 weekly during 6 weeks; after a suspension of 
payment for 7 weeks he may again receive the same sum for 
another 6 weeks. Not more than $54 in one year may thus 
be received. Every regular member who has paid his dues 
for an entire year has the right to receive $5 weekly during 
the time of disability on account of sickness. During the 
first week nothing is paid, and when the sickness is due to 
drunkenness or vice all claim is forfeited. Sick benefits 
are paid only upon the certificate of the physician that the 
member is unable to work, and only for 13 weeks in any one 
year. A committee of the lodge visits the disabled member 



INDUSTRIAL INSURANCE 



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BENEFIT FEATURES OF THE TRADE UNIONS 99 

in his home and establishes the fact of his illness. Women 
who are members are not permitted to draw sick benefits 
3 weeks before and 5 weeks after confinement. 

Death benefits are paid after the death of a member who 
has paid dues for 2 years to the family or person who pro- 
vides for the funeral, to the amount of $50 for the expenses 
of burial; but the entire life insurance payable, including 
this $50, is fixed by classes, according to the period during 
which dues have been paid: (i) members of 5 years' 
standing, $200; (2) members of 10 years' standing, $350; 
(3) members of 15 years' standing, $550. The member 
may designate the beneficiary who is to receive the death 
benefit. A member may receive funeral benefit in case of 
the death of wife, or mother who is dependent on him. A 
person who has been a member for 15 years may keep his 
claim to death benefit alive by paying monthly dues of 10 
cents, by quarterly instalments, after he has become disabled 
for work. 

The beginnings of invalid insurance are found in this 
system. A member who has become blind, or who has lost 
both hands, is entitled to receive a lump sum as large as his 
family might receive if he had died at the same time. Upon 
receiving such payment the person loses his membership 
and his claims. In case the illness or death is caused by 
military service the benefit is not paid; nor is there need, 
as the government pension then makes further insurance 
unnecessary. The union has also considered and worked 
out a plan of old-age pensions; and it is thought that an 
addition to the weekly dues of 10 cents would cover the 
cost of such insurance. The indemnity for the loss of time 
through unemployment is, as already explained, frequently 
a kind of old-age pension; because most of the members 
who are continuously out of work are old and feeble, and 



ioo INDUSTRIAL INSURANCE 

a payment of $3 weekly during a part of the year prevents 
the necessity of appealing to public or private charity. 2 

Mr. A. M. Sakolski has described the organization and 
activities of the strong Iron Moulders' Union of North 
America with great care, and has given an excellent account 
of its development and administration. This union was 
organized in the year 1859. Before 1895 its sick-benefit 
department was left entirely with the local unions, and the 
administration in some of the lodges was quite successful. 
But this form of organization, natural in primitive stages 
of growth, proved to be unsatisfactory. In a country like 
the United States, where the workmen either voluntarily 
or necessarily move very much from place to place, the local 
system is found to work badly; a member who goes into a 
new city may find himself in need of help during the first 
weeks of his stay, and he may not have acquired right to 
relief at that moment, or there may be no lodge with sick- 
relief features in his new home. The General Convention 
in i895 3 adopted a rule according to which any member 
disabled by accident or sickness may receive a weekly bene- 
fit of $5 after the first week and during 13 weeks. A 
member who has paid dues for 6 consecutive weeks and is 
not in debt for dues of more than 13 weeks has claim upon 
this relief. The weekly dues are 25 cents, out of which 
amount the local lodge retains 8 cents on deposit, and trans- 
mits the remainder to the national treasury to cover costs 
of strikes and of administration. Any surplus of the local 
treasury is sent to the national treasury, and from the 
central fund relief is given to local lodges which may be 

2 REFERENCES : Constitution of the Cigarmakers' Union, i4th edition. 
Report of 1906 ; Helen L. Summer, in Trade Unionism and Labor Prob- 
lems, John R. Commons, editor, p. 527 ; Report of Industrial Commission, 
Vol. XVII, p. 280; Cigarmakers' Official Journal; Hollander and Barnett, 
Studies in American Trade Unionism, p. 66. 

8 Constitution and Rules, Art. 17, sec. i. 



BENEFIT FEATURES OF THE TRADE UNIONS 101 



unable to meet extraordinary claims on the sick fund. Thus 
each lodge has behind it the strength of the entire national 
body. The system has worked admirably. Since the first 
of January, 1896, at which date sick insurance was first 
introduced, the expenditures have been as shown in the 
table : 

TABLE II 



Year 


Membership 


Sick Benefits 


1806 


20,920 


$ 38,510.00 


j.uyw. . 

1897 
l8 9 8 

1899 

I9OO 


23,003 
25,072 
28,941 
4.1,180 


36,720.00 
37,710.00 

57,495 -oo 
102,936. oo 


I9OI 


48, 11^ 


118,51";. oo 


IOO2 


<4,2^I 


134,116.00 


IQO3 


64,472 


179,3 5 5.00 


IOO4. 


76,416 


193,214. 25 









One part of the experiment is so important and sig- 
nificant that it deserves special remark. The winter of 1904 
was very cold, and the iron industry was temporarily de- 
pressed. The number of members who resorted to the sick 
benefit fund for relief was unusually large. The official 
organ of the union 4 explained this fact by saying that these 
payments were more generally due to unemployment than 
to actual illness which incapacitated members for work, and 
that it was a consequence of the depression in the industry. 
It is possible that idleness may cause sickness in many 
instances, though this subject has not been thoroughly 
studied. 

The provisions for unemployment are worthy of men- 
tion. The actual cost of the sick insurance is about 6 cents 
per member per week for the entire membership of the 
national union, the benefit being $5 per week. The weekly 
dues of 8 cents per member therefore leave a surplus in the 
national treasury. In 1897 the general convention voted 

* Journal, August, 1904, p. 590. 



102 



INDUSTRIAL INSURANCE 



to set apart i cent of this surplus from the dues to pay the 
dues of members who happen to be out of work. Between 
the year 1897 (October i) to the end of 1900 the total 
expenditures, for dues of unemployed members amounted 
to the sum of $6,577.38, from which fact it is apparent that 
fewer than 500 members were unemployed. Since the year 
1900 conditions have been even more favorable. Yet a 
few years of industrial depression would exhaust a very 
large reserve fund. 

The union provides life insurance, and indemnity in" 
case of total disability. The death benefits and the indemni- 
ties for total disability vary with the duration of member- 
ship in the union. A member who has paid dues during 
5 to 10 years is able to claim a death benefit or indemnity 
for total disability of $150. When membership has con- 
tinued for 10 to 15 years the sum is fixed at $175, and after 
15 years at $200. The monthly dues for this fund are 6.4 
cents per member, and deficits are avoided by devoting to 
this fund the entrance fees of new members, $2 each. 

TABLE III 



Years 


Receipts 


Expenditures 


Monthly Dues 


1880-82 


$16 ^07 OO 


$I2,OOO OO 


$O 07 12 


1882-86 . . . 


12 420 Q2 


32 4OO OO 


O 07 12 


1886-88 ..... 


22 182 OI 


16,^^0 so 


O. IO 


1888-90 


20,088. oc 


21,010 OO 


O.o8 


18000? 


4,170 10 


^8,<I2.QO 


0.64 


1895-99 
1899-02 


D^/y- A v 

54,631.56 

111,916. 13 


40,499.00 

75> 6 3 J -36 


0.64 (and $2 en- 
o . 64 trance fee) 



The expenditures for strikes during the 3 years 1899- 
1902 were $111,571.22; for the organization of new local 
unions and the general work of propagandism, $16,000 
annually ; for the expenses of the general convention in the 
year 1902, $50,670.72. The general convention meets once 
in three years. The financier of the national union receives 
from the local secretaries monthly reports containing the 



BENEFIT FEATURES OF THE TRADE UNIONS 103 

names of all contributing members, the amount of each 
payment for sick benefits, and the condition of the treasury. 
The account of each member is kept on a separate card. 
A physician is appointed to examine the applicant and give 
a certificate a measure employed to assure the union that 
deception is not practiced. In order to insure the funds 
against fraud, all officials intrusted with handling funds 
must give bonds which cover the risk to the organization. 
The union was driven to adopt these measures because it 
had learned, by the bitter experience with dishonest officials 
in former years, that they are necessary. The method of 
keeping accounts is uniform in all lodges, and the national 
office supervises and controls the entire proceeding. Dur- 
ing the year 1904 the Iron Moulders' Union paid for strikes 
$266,283.43; sick benefits, $198,214.25; death benefits and 
indemnity for total disability, $53,786.40; costs of adminis- 
tration, $74,586.97; entire expenditures, $592,871.05. 

In general we may cite the expression of Mr. Samuel 
Gompers as typical of the convictions of the leaders of the 
unions affiliated with the American Federation of Labor. 
He said substantially that he deemed it his duty to urge upon 
the unions to make themselves useful to the members, not 
only in securing higher wages and better conditions of hours 
and work-places, but also by furnishing relief in times of 
distress of members. The first condition of such a measure 
would be that the dues should be increased. There is no 
good reason why the union should not, in addition to pro- 
tection of trade interests, secure to the workers support in 
time of sickness, unemployment, old age, and invalidism. 5 

Unions of the railroad employees. These unions do not 
belong to the American Federation of Labor. There are 

5 Quoted from a speech in 1905 in Die bestehenden Einrichtungen zur 
Versicherung gegen die Folgen der Arbeitslosigkeit im Ausland und im 
Deutschen Reich, Part I, p. 357. 



104 



INDUSTRIAL INSURANCE 



seven of these brotherhoods, of which five consist of work- 
men engaged directly in the dangerous labors of train ser- 
vice. The following table presents a summary of the facts 
relating to these organizations : 

TABLE IV 



Organization 


Membership 


Payments (1905) 


Number of Payments 


Conductors 


1.6 OOO 


$ 825 OOO 


4.2? 


Engineers 


47 OOO 


I 327 SOO 


CQ4. 


Firemen 


^,287 


810 2^0 




Switchmen 


23.OOO 


IZA..2OO 


icrj 


Brakemen 


Mr 


I,Z4.Z,21.6 


5 . 
1,1^4* 










Total 


2?e 826 


$4 662 186 













* The number of payments by the brakemen is one-half the total for the two years 1903 
and 1904. 

From the year 1868 to 1905 the Locomotive Engineers' 
Mutual Life and Accident Insurance Association paid out 
for 6,232 cases of relief the sum of $14,983,038.71. The 
employees of the railroad corporations which have estab- 
lished relief departments must not only pay their dues to 
the relief departments, but also to their brotherhood funds 
for sick and accident benefits. Fortunately their wages 
are relatively high, and they are generally able to provide 
this double insurance. But they frequently complain that 
the companies throw on the employees an excessive burden 
of cost in the relief departments. Mr. J. B. Kennedy has 
recently made a careful study of the insurance funds of 
these railroad unions, and from his account the most im- 
portant facts may be obtained. 6 

The number of railroad employees in the United States 
is estimated to be over 1,000,000 persons, and one-sixteenth 
of the population depends on them for support. Over 300,- 
ooo of these workmen are members of trade-unions which 
offer sickness and accident and death benefits. There are 



8 Hollander and Bennett, Studies in American Trade Unionism (1905), 
P. 323- 



BENEFIT FEATURES OF THE TRADE UNIONS 105 

two noteworthy characteristics of these railroad unions: 
the members are workmen in a particular occupation of 
railroad service, and any member is entitled to change from 
one company to another without losing his claims in his 
union. 

The Grand Brotherhood of Locomotive Engineers, at 
first called Brotherhood of the Footboard, was founded 
August 17, 1863. In the year 1890 the number of members 
was 8,000. In 1904 the number had reached 46,400, and 
the local lodges numbered 652. Since January i, 1890, all 
members under 50 years of age must be inscribed in the 
insurance department of the union as a condition of mem- 
bership. 

The Order of Railway Conductors was founded July 6, 
1868. In the year 1891 all members were obliged to belong 
to the insurance department, and from that time forward 
the union grew rapidly. On December 31, 1903, the num- 
ber of policies in force was 27,875, and since the union was 
founded $6,329,067 have been expended. 

The Brotherhood of Locomotive Firemen was founded 
December i, 1873, an( ^ i n ^78 membership in the insurance 
department was made obligatory for all members of the 
union. In 1904, 98.59 per cent, of all members were in- 
sured, and the policies in force had a value of $75,559,000. 
Since its foundation the union has expended $7,941,065 
in indemnities and life insurance. 

The Brotherhood of Railroad Trainmen, at first called 
Brotherhood of Railroad Brakemen, was organized Septem- 
ber 23, 1883. In the year 1903, 95.55 per cent, of all 
members held life-insurance policies. Up to April i, 1904, 
the union had paid $8,987,284.54 indemnities and death 
benefits. The New York Bulletin of Labor for 1906 gives 
the later figures, $10,491,101.20. 

The Order of Railroad Telegraphers was organized 



io6 INDUSTRIAL INSURANCE 

June 9, 1886, and in 1898 insurance was made obligatory 
on all members. Twelve monthly payments of 20, 30, or 
60 cents are required, according to class, and the death 
benefits paid vary from $300 to $500 and $1,000. The 
mortuary fund remains intact and cannot be used for other 
purposes, and on November 30, 1905, it amounted to $126,- 
730. 16 a recognition of the need of a reserve fund to meet 
the claims. The entire expenditures up to December i, 
1904, were $170,450. 

The Switchmen's Union, at first under the name Switch- 
men's Mutual Aid Association, was organized in 1886. In 
1901 the statutes of the union made insurance obligatory 
on all members. At the end of the year 1903 the policies 
had a face value of $6,679,200, and the expenditures since 
organization had been $207,336.75. 

The International Brotherhood of Maintenance-of-Way 
Employees was organized in 1887. Insurance in the union 
fund is at present voluntary, although it was formerly 
obligatory. Many of the members who held life-insurance 
policies in ordinary companies, and who had some doubts 
on account of the uncertainty about assessments, induced 
the general convention in 1896 to recede from the former 
position favoring compulsory membership in the life-insur- 
ance fund. Up to the year 1903 the fund had expended in 
relief $150,000. On January i, 1904, the number of mem- 
bers was 40,000. 

All these unions distinguish between the funds for death 
benefits and indemnities for disability, which are managed 
by the national organization, and the sick and accident 
insurance which is carried by the local lodges. The by-laws 
of the Conductors' Union in the year 1868 prohibited the 
local lodges from administering death benefits and indemni- 
ties for disability, on the ground that this would weaken 
the national society. The Locomotive Engineers followed 



BENEFIT FEATURES OF THE TRADE UNIONS 107 



the example of the conductors in 1869 an d established 
similar regulations. The national association makes the 
rules for the management of the local funds for sickness 
and accident insurance. In consequence of improved condi- 
tions and administration, the number of claims on the dis- 
ability fund has gradually diminished. The employees on 
railroads regard the disability insurance as very important 
on account of the liability to injury in their occupation. 

TABLE V 







NUMBER < 


)F CLAIMS 


PER CENT. 
OF CLAIMS 


CLAIMS FOR 
DISABILITY 




PERIOD 


Death 


Disability 


FOR 

DISABILITY 


PER I.OOO 

MEMBERS 


Conductors 
Firemen 


1893-94 
1895-96 
1897-98 
1899-00 
1901-02 
1903-04 

1804. 06 


265 
274 
363 

440 

5 2 3 
688 

20 c 


49 
46 

63 

55 
81 

92 

IdC 


15-6 
14-3 
14.8 
II. I 

13-4 
n. 8 

? 2 O 


3-8 

y 

2.6 

3-2 
3- 

6 o 




1896-98 
1898-00 
1900-02 
1902-04 


349 
488 

655 
857 


118 
174 
186 
234 


25-3 
26.3 
22. I 
21.4 


4-3 
4-7 
3-9 
4-3 



Total disability has been defined in the by-laws and 
practice of these unions of railroad employees in a specific 
sense, and it is made to include only incapacity to work at 
the usual occupation. In 1898 the rules of the engineers 
had described total disability as the loss of a hand at or 
above the wrist, or the loss of a foot at or above the ankle, 
or the loss, complete and permanent, of the sight of an eye 
or of both eyes; and provided in such cases that the member 
should receive the entire amount of the face of the policy, 
the same as in case of death. The by-laws of the conductors 
recognize loss of hearing, if it amounts to total deafness, as 
total disability. The regulations of the switchmen go 
farther and add the loss of four fingers of one hand at or 
above the second joint, or of three fingers and a thumb on 



io8 INDUSTRIAL INSURANCE 

one hand at or above the second joint. These conditions 
are more liberal and explicit than those of the policies custo- 
mary with the ordinary casualty companies, which add limi- 
tations and conditions which impair the value of the policy 
for men in such occupations. The rules as described are 
more satisfactory and involve smaller cost. It is probable 
that members of a union do not require the same exacting 
restrictions as the customers of a corporation engaged in 
the insurance business, because the comrades of a wounded 
man will know whether he is deceiving the union or not, 
and a private company has not this protection. If a member 
desires to buy accident or sickness insurance, he can do so 
through the local lodge. The telegraph operators have not 
thought it desirable to establish accident insurance, because 
their employment is not specially hazardous. Not without 
unfortunate experiences and mishaps have the unions devel- 
oped their systems of insurance during the early experi- 
mental years, 1886 to 1880. Since 1880 the methods have 
been comparatively uniform and efficient. During the early 
years of the life of the unions the benefits were very fluctu- 
ating and uncertain in amount, depending on the accident 
of the state of the treasury; but since the revision of the 
regulations the indemnity in case of total disability and the 
death benefits have been fixed and stable. During the years 
1890 to 1900 the principle has gradually been established 
that the benefits should be diminished with advancing years, 
the premiums remaining the same ; while in ordinary insur- 
ance companies the premiums change according to the age 
of the insured. 

Table VI shows the amounts received in each union 
according to the age classes. 

In former years the death benefits and indemnities for 
total disability were raised by assessments upon the mem- 
bers after the accident happened; but now all the brother- 
hoods, with the exception of the engineers, maintain reserve 



BENEFIT FEATURES OF THE TRADE UNIONS 109 
TABLE VI 



Union 


Age Class 


Amount of Policy 


Locomotive engineers 
Conductors 


Under 40 
40-45 
45-50 

Under 3 <\ 


$4,500 
3,000 
1,500 

3OOO 


Firemen 


35-45 
45-50 

Under 45 


2,000 

1,000 
3,000 


Trainmen 


Over 45 
No age classes 


I.2CO 


Telegraph operators 


18-45; 


I,OOO 


Switchmen 


45-5 
50-60 

No age classes 


500 
I 2OO 


Trackmen* . 




I OOO 









* Only exceptionally does this union pay policies according to age class. 

funds to cover the expenditures for claims as they arise. 
The premiums must be fixed in each organization according 
to the wages of the members, taking into account also the 
indemnities they desire to secure and the number of claims. 
The expenditures have steadily increased. Among the 
locomotive engineers, the conductors, and the firemen, the 
policies of $1,500 are preferred. Step by step, since the 
firemen in 1878 introduced the requirement, has insurance 
of all members been made obligatory. Is not this a proof 
that the tendency of all industrial insurance is toward com- 
pulsory insurance? In all unions there are non-beneficiary 
members who are not admitted to the insurance privileges 
because they are disabled from employment or have become 
old. The cost of life insurance per $1,000 varies in the 
brotherhoods : 7 

Engineers, Dec. 31, 1903 $17.80 

Conductors, Dec. 31, 1903 16.00 

7 Hollander and Barnett, op. cit., p. 343. 



110 INDUSTRIAL INSURANCE 

Firemen, June 30, 1904 12.00 

Trainmen, Dec. 31, 1903 18.00 (or $17.78) 

Telegraph operators, Dec. 31, 1903 7.20 

Switchmen, Dec. 31, 1903 20.00 

Trackmen, Dec. 31, 1003 12.00 (or $15 and $18 by class) 

The corresponding premiums in ordinary casualty insur- 
ance companies would be in the age class of 35 years, per 
$1,000 of insurance: locomotive engineers, $27.23, and the 
same for firemen, trainmen, switchmen, and trackmen; for 
conductors and telegraph operators, $22.23 5 or about 30 
per cent, higher for death benefits alone ; while the brother- 
hoods also guarantee benefits of equal amounts for total 
disability. It is observed that the premiums vary in the 
different unions according to the degrees of risk. Thus the 
premiums for the telegraph operators are relatively low 
because they are not exposed to unusual dangers in their 
occupation. The firemen pay a lower premium because they 
are young, and when they become older they pass up into 
the ranks and society of the engineers. Among the switch- 
men advancement is not so frequent; there are no age 
limits of membership, and therefore the rates are relatively 
high. 

As a rule, the unions require their grand master and 
grand secretary to give bond for the security of funds 
managed in the sum of $10,000 to $100,000. The funds 
of the insurance departments are kept separate from other 
funds of the unions, and a separate assessment is levied for 
the support of these funds. Regulations have been passed 
to prevent the use of insurance funds for other purposes. 
State laws also govern the management of regular insurance 
companies, and these funds come under state supervision, 
by insurance commissioners a further security that they 
will not be scattered for strikes or other alien objects. In 
this way one of the weaknesses of trade-union insurance 



BENEFIT FEATURES OF THE TRADE UNIONS ill 

is removed, for the entire scheme is rendered unstable if 
money paid for benefit funds may be diverted by action of 
officers, or even by vote of the representative conventions. 
In the future development of industrial insurance we 
must reckon with the trade-unions as among the most im- 
portant agencies for promoting the movement, especially 
as legal compulsion seems to be remote. The stronger 
unions have long since learned that an insurance fund is 
the first, most sure, and most permanent foundation for the 
popularity of the union. Only in extraordinary, uncertain, 
and unforeseen circumstances is a strike fund needed, while, 
on the contrary, provision of benefits in cases of sickness, 
accident, and death is a permanent and certain need of 
members. If compulsory insurance were introduced, the 
legislatures of the states would find it desirable and neces- 
sary to bring these powerful organizations into the system 
by recognizing, regulating, and controlling their by-laws 
and administration. The state governments could well 
afford to follow this course, because the unions have shown 
that they can administer insurance funds at low cost and in 
an efficient and satisfactory way. Up to this time the trade- 
unions are the only organizations which have shown ability, 
even in moderate measure, to provide unemployment 
insurance. 



CHAPTER IV 
THE INSURANCE OF THE FRATERNAL SOCIETIES 

These societies of the United States are similar in many 
respects to the friendly societies of Great Britain, but they 
are not confined, as in the mother country with its established 
social distinctions, to the so-called working classes. Indeed 
there is a strong inducement for professional persons, es- 
pecially those who seek clients or votes, to belong to one or 
more strong fraternal associations for the acquaintance and 
influence which membership gives. 

The characteristics which distinguish these brotherhoods 
are the following : ( i ) Each local lodge belongs to a system 
of similar lodges with common regulations. (2) Each 
lodge is an independent society for local purposes, and yet 
the rules which govern it are made by a legislative body 
composed of delegated representatives elected by the lodges, 
and there is a central administration by officials chosen by 
the federation. (3) Each fraternal organization has its 
own peculiar ceremonies, usually of a religious character, 
which gives expression to the sympathetic bonds of the 
members. The secret pass-words and signs and solemn 
forms of initiation provoke curiosity and attract new mem- 
bers. (4) Brotherly assistance is rendered to sick or help- 
less members. Many of the services rendered by a lodge to 
its members could not be formally prescribed in a contract 
nor reported in statistical tables, (5) All lodges pay some- 
thing or render some form of aid to members who are 
wholly or partially unable to work. (6) Death benefits are 
paid to the bereaved family of a member who has died, or 
to his legal heirs. It is in this last point that the fraternal 

112 



THE INSURANCE OF THE FRATERNAL SOCIETIES 113 

societies discover their chief social function, and it is this 
fact which makes them competitors of the ordinary insur- 
ance companies which carry on business for profit. The 
strife between them is unceasing and often bitter, even if 
veiled under formal courtesy. If the financial basis of a 
fraternal society is sound it can continue to exist, even when 
the ceremonies and sociable features are lightly esteemed 
and are neglected; but if the administration is defective, 
the assessments unduly frequent and high, the economic 
burden excessive, then the society goes to the wall in 
spite of all its sentimental sympathies and its impressive 
ritual. 1 

It is not easy to discover how large a proportion of the 
members of these fraternal societies belong to the wage- 
earning group. Statistical material for a judgment is want- 
ing and the opinions of representative leaders vary according 
to their personal experience and observation. In some lodges 
the workingmen are more numerous than in others. In- 
quiries made among almoners of charity, friendly visitors, 
residents of settlements, collectors for the "industrial insur- 
ance companies," and officials of the fraternal societies 
themselves furnish evidence that the unskilled and low-paid 
workingmen do not constitute any large part of the mem- 
bership, but that these are more likely to purchase, at high 
rates, a little claim on burial benefits from the industrial 
companies and to secure an imperfect provision for sick- 
ness in some club or mutual aid society with small dues. 
In the larger cities and in certain smaller industrial 
centers it is probable that the Catholic fraternal orders 
consist almost entirely of wage earners. The most im- 
portant single investigation, so far as known to the 

1 Proceedings of the Nineteenth Annual Meeting of the National Fra- 
ternal Congress, p. 445. 



114 



INDUSTRIAL INSURANCE 



writer, is that of the Bureau of Labor Statistics of Con- 
necticut. 2 

Activity of the fraternal societies? In the year 1905 
there were said to be 168 societies of the kind under con- 
sideration in the United States. The first to be established 
dated from October i, 1868, the youngest from September 
30, 1904. How many in the meantime have dissolved it is 
difficult to discover. On January i, 1905, there were 87,- 
758 lodges with a total membership of 5,111,480 persons, 
of whom 232,068 were "social members" who had no claim 
upon the life-insurance benefits of the lodges, while the 
great majority (4,879,412) were in the full enjoyment of 
these rights. During the year 1904 the number of lodges 
increased about 3,860, and the membership 137,049, and 
yet this very year was for all forms of life insurance 
organizations in the United States a year of unrest, sus- 
picion, and difficulties. The insurance in force, at least on 
the face of contracts, was on January i, 1905, $6,665,- 
141,251. The expenditures during the year 1904 were 
$64,322,892. The assets on January i, 1905, were stated 
to be $51,465,430, and the liabilities $9,619,089. The 
total expenditures of all fraternal societies since their 
foundation, chiefly for death benefits, had been $787,427,- 
445; and in addition to this 13 societies which offer sick 

2 Report of Bureau of Labor Statistics of Connecticut, 1891; Article 
of E. W. Bemis in Universal Cyclopedia, Vol. IV, p. 521 : 



Occupations 


Societies with 
Branches Per cent. 


Societies without 
Branches Per cent. 


In business 


21 . l6 




In professions 
Well-paid mechanics 
Lower paid mechanics 
Clerks 


5-33 
38-65 
20.28 


14.74 
27-37 
6.35 


Farmers 
Housewives 


0.66 
2.72 




Total per cent 













3 Statistics of Fraternal Societies, 1905, Rochester, N. Y. 



THE INSURANCE OF THE FRATERNAL SOCIETIES 115 

insurance had paid out for this purpose $312,514,193. The 
total expenditures of all societies for all purposes had been 
since their beginning $i,O99,94i,638. 4 

Costs of administration.-lt is the boast of the fraternal 
orders that their expenses of administration have been kept 
remarkably low. ; A comparison has been drawn between 
twenty-five of the most important insurance corporations 
with twenty-five of the largest fraternals. The policies of 
the twenty-five insurance companies had a value, on Decem- 
ber 31, 1904, of $8,541,899,611, while the smaller but more 
numerous policies of the fraternals had a face value of $5,- 
210,016,008. The costs of administration of the twenty-five 
insurance companies was 18.3 per cent, of the receipts, 
while the corresponding costs of the fraternals amounted to 
only 8.4 per cent. The representatives of the fraternals 
offer an explanation of the difference. In the first place the 
salaries of the officers of the fraternals are very low, while 
those of officials of the great companies are, in many cases, 
notoriously extravagant. In the case of the companies 
every policy holder has been won at considerable expense 
for commissions of solicitors, while in the lodges members 
are solicitors who work zealously without pay. Further the 
meetings of the lodges afford a method of collecting the 
premiums and dues without great expense. 

National organisations. The fraternal societies have 

4 A national fraternal sanatorium association has been formed to pro- 
vide for the treatment of members afflicted with tuberculosis. They have 
secured property in New Mexico valued at $1,000,000, and an effort is 
made to endow and support it. The National Fraternal Congress and the 
Associated Fraternities of America have voted approval of the enter- 
prise. It is affirmed that over $9,000,000 were paid out in one year for 
those who had died of consumption, and it is believed that by curing and 
preventing the disease the cost of sick benefits and premiums for life 
insurance can be substantially reduced. The cost for caring for patients 
will be from $7 to $10 per week. The legislature of Illinois, in 1907, 
made it legal for fraternal societies to establish and maintain such 
sanatoria. 



Ii6 INDUSTRIAL INSURANCE 

federated themselves in two large groups called the National 
Fraternal Congress and the Associated Fraternities of 
America. The purpose of these federations is to discuss 
the common interests of the lodges, to explain the technical 
problems of insurance, and to influence legislation. The 
Catholic fraternal benefit societies follow the same economic 
principles as the others, as explained above, and their statis- 
tics are included with those of other similar organizations. 
Naturally their members are of the Catholic church and 
many of the priests are very active in promoting the societies 
in their parishes. These Catholic orders have paid out 
during the past twenty-five years over $65,000,000 in death 
and sickness benefits, and they have now over 400,000 
members. 

Objections and criticisms. The fraternal benefit socie- 
ties are severely criticised by actuaries and insurance 
specialists in the United States, especially in cases where 
our societies have refused* to learn from the history of the 
older English friendly societies and to reform their plans in 
accordance with experience. The more familiar criticisms 
are the following : The premiums of the older members are 
in comparison with those of younger members relatively too 
low to cover the risk, and therefore the younger members 
must carry more than their share of the burden. Ordinarily 
the f raternals have declined to provide reserve funds or have 
very inadequate reserves, and so the benefits must be paid 
out of assessments levied at or near the time of ripened 
claims. In consequence of these defects the rates of assess- 
ments rise gradually, and therefore the younger members, 
who must carry more than their proper share of the cost, 
fall away from membership, only older members remain; 
the burden becomes unbearable, and the brotherhood be- 
comes bankrupt, unable to fulfil its promises or at least 
the expectations of the members. Once the older men are 



THE INSURANCE OF THE FRATERNAL SOCIETIES 117 

out of a fraternal society they find themselves too far 
advanced in years to buy insurance in regular companies, 
or the rates are so high as to be prohibitive. Furthermore, 
it is claimed by the representatives of the ordinary insur- 
ance companies that the salaries of the officials are so low 
that competent and skilful men will not accept the respon- 
sible administrative offices, and that, under imperfect man- 
agement, the funds of the fraternal societies will be 
dissipated. All these arguments are used in the competi- 
tion of the insurance companies to break down the influence 
of the fraternals. 

On the other side the importance and value of the frater- 
nals may be defended by the following arguments: The 
fraternals have already demonstrated the general and grow- 
ing interest of wage earners and persons of low salaries in 
industrial insurance ; and the fraternal societies adapt them- 
selves to the needs of the workmen with inadequate income. 
In spite of their defects, which may be acknowledged, these 
associations have already paid out enormous sums for 
sickness and death benefits. It is affirmed that in these 
societies men of ability can be found to administer the 
affairs of the insurance departments with fidelity and suc- 
cess, without having to pay them extravagant salaries. 
Naturally no one can claim that the administration is equally 
skilful and effective in all societies alike. 

The problem of improving the working of the fraternal 
benefit societies has engaged general attention and called 
forth much discussion. How may the fraternals be made 
useful in forwarding industrial insurance? It is obvious 
that fraternal societies are not adapted to furnish accident 
insurance, at least without important modifications of pres- 
ent laws. It seems wiser to approach this matter from the 
side of the lawmaking employers liable for injuries suffered 
by the employees. The doctrine of the risque professionnel 



Il8 INDUSTRIAL INSURANCE 

places the responsibility for compensation first of all on the 
men who direct and control industry, and therefore society 
ought not to require the workmen to take the initiative in 
this field. 

In the field of sickness insurance the lodges have 
achieved considerable success, and they seem well adapted 
to this purpose. As already indicated thirteen of the fra- 
ternals have paid since their organization over $312,514,193 
for sick benefits ; while the other societies have their sickness 
funds and aid families of members in case of illness and 
need. Evidently it should not be difficult to find a place 
for such associations in a system of compulsory insurance, 
if the time comes when society is ready for that measure. 
Such organizations have been utilized in Germany for just 
this purpose. 

Some of the fraternals have sought to establish old-age 
and invalid insurance, but this is not general. The tenden- 
cies and results have not yet been clearly revealed. The 
fraternals are very similar to the French "mutualists," and 
in France the mutualist societies are carefully included in 
the government schemes of provision for old-age pensions. 
Whether the state governments merely regulate, subsidize, 
or compel insurance for old age and invalidism they may 
find ready to hand an administrative machinery which 
works at low cost and has roots in popular sympathies. 

| It is in the sphere of "life insurance" that the fraternal 
societies of the United States have thus far found their 
principal mission. As shown already in the statistics the 
fraternals administer their insurance schemes at very low 
cost 8.4 per cent, of premiums, as compared with 30 to 40 
per cent, of the industrial insurance companies which do 
business among the workingmen and collect premiums in 
weekly payments. This fact has awakened the hope in many 
minds that in the near future the workingmen will be able 



THE INSURANCE OF THE FRATERNAL SOCIETIES 119 

to provide for themselves reliable life insurance in societies 
which rest on the principle of mutuality and self-govern- 
ment. 

State regulation. It seems to be beyond reasonable 
question that the interest of the members and the future 
usefulness of the fraternal societies demand a degree of state 
intervention and control. The argument for this statement 
is clear and strong. The vast majority of the members 
have not and cannot be expected to have expert knowledge 
of the business of life insurance, and the officers themselves 
are rarely actuaries of repute. The strength of the fraternal 
association lies in a certain sympathy, even sentimentality, 
which binds the members together in strong bonds, but 
which obscures the judgment of reality and hard mathe- 
matical facts, and is inconsistent with the necessary cold- 
blooded calculation and business direction which assures 
the wise management of funds. It is almost universally 
conceded that the other life insurance companies must be 
placed under very rigid control by the state, just as national 
banks are supervised and made to conform to regulations 
in the public interest ; but it would seem that the majority of 
the members of the brotherhoods have made themselves 
believe that the law of gravity, the multiplication table, and 
economic forces and laws may be successfully set at defiance 
if only men love each other enough; and that such common- 
place matters as tables of mortality and interest rates are 
applicable only to the insurance of rich men. Not seldom 
have state commissioners of insurance and actuaries who 
are true friends of the f raternals given to the public and to 
the societies the necessary information and suggested the 
protective measures which must be taken in order to provide 
a solid foundation for their insurance methods. But such 
suggestions have only too generally been regarded with 
suspicion and hostility, and there has been a constant antag- 



120 



INDUSTRIAL INSURANCE 



onism between the better and more outspoken commissioners 
of states and the representatives of the societies. When it 
was shown that the reserve funds and premium rates were 

TABLE I 

MORTALITY TABLE 

Deaths Expected per 1,000 Members 



Age 


Table of National 
Fraternal Congress 


Actuaries Table 


American Experi- 
ence Table 


2O 


S.OO 


7. 20 


7.8o 


21 
22 


5-04 
5.O7 


7-38 

7. 46 


7 .86 

7 . Ql 


27. . 


5. II 


7.56 


7-96 


24. . 


c. it; 


7.67 


8.01 


2S. . 


<;. 20 


7 . 77 


8.06 


26 


* 26 


7 80 


8 13 


27 


f 72 


/ -"y 
8 01 


-o 

8 20 


28 


<% 3Q 


8 14 


8.26 


2O 


547 


8 28 


8.34 


3O 


See 


8.42 


8.43 


2J 


, 

$ 6H 


8.58 


8.51 


2,2. . . 


5. 7 s * 


^ 

8 7<; 


8.61 


33. . 


i j 

;.87 


/o 
8. 02 


8.72 


3A. . 


5 * 

6. oo 


9. IO 


8.83 


?;. . 


6.i: 


9. 20 


8.0^ 


^5 
36. . . 


6.31 


0.48 


9 .OO 


37- . 


6.40 


0.60 


0- 23 


38 


6 70 


901 


941 


2Q 


"' ' 

o 02 


IO 13 


9CQ 


4O 


7 17 


j.->. j.^ 

10 36 


9. 70 


4.1 


7 4 1 ? 


.LU.^W 

10 61 


IO.OI 


4.2 


7 77 


10 80 


IO. 2"? 


47 


/It 

8 ii 


II . 2< 


IO. <C2 


44 

:;;:;:;: 


8.48 
8.87 

O. 2O 


II.7O 
12.21 
12.84 


10.83 

ii. 16 
ii . <6 


47. . . 


9. 7"? 


13. I2 


I2.OO 


48... 


IO. 27 


14. 26 


12. ?I 


40- .. 


IO.82 


I ^.06 


13.11 


so. . . 


ii. 44 


XC.Q4 


13.78 


ei? 


I *\ 71 


21 66 


18 ?7 


60 

6< . 


22.75 
34 3O 


30.34 
44 08 


26.69 
4O. 13 


70. . . 


<?3.6< 


64.03 


6l .00 


7tr. . 


JO-^D 
8=1.48 


oz. c6 


04. 37 


70 


12=;. ^< 


130. 07 


131.73 











inadequate and that the methods of administration must 
lead to bankruptcy, this was taken, and often is still taken, to 
be a proof that the men who give timely warning are ene- 



THE INSURANCE OF THE FRATERNAL SOCIETIES 121 

mies of fraternals and perhaps in the pay of the regular life 
insurance companies. 5 On the other hand the state commis- 
sioners have denied hostility and declare that they desire 
nothing more than the essential basis for sound and endur- 
ing insurance. An example may be cited. The commis- 
sioner of Massachusetts said in his report for 1904 : 

Fraternal insurance has come to stay. It should aim to get upon 

a basis that its results will be only good Why then should not 

this fraternal question be taken up and considered reasonably and 
without prejudice, for the purpose of securing through the legisla- 
tures a uniform measure of as wide application as possible, which will 
at least prevent the organization of new companies on lines which 
have been demonstrated over and over again to be faulty, and give 
the companies now in existence the benefit of a uniform code in all 
the states? 6 

The Insurance Commissioner of North Carolina said 
in 1905 : 

In the opinion of the Commissioner it would be best that all 
associations and orders doing business in this state should be required 
to have and keep a certain number of members and a certain amount 
of business, or not be allowed to commence or continue business. It 
is not best, or for the protection of our people, that associations of 
this character should be allowed to organize with less than a dozen 
men, and no assets or capital or responsibility back of them. 7 

The necessity of further legislation in order to prevent 
the entire ruin of the fraternal movement has of late been 
recognized quite generally by the enlightened men in the 
societies and by their advisers. Such facts as the following 
have startled many into action and already led to a certain 
improvement and reorganization. It appears that out oi 

5 The grounds for rejecting the calculations of the fraternal societies 
are partly found in the discrepancies apparent in the mortality tables of 
the fraternals as compared with those used by insurance companies. 

* Report for 1904, Part II, p. x. 

7 Report, p. xiv. 



OF THt 

NIVEJR8 



ITYj 
jk^r 



122 INDUSTRIAL INSURANCE 

114 fraternal benefit societies only 19 have accepted even 
the premium rates of the National Fraternal Congress; and 
of these 19 associations not one has adopted a rate which 
will cover completely the costs of administration and meet 
fully the claims of the beneficiaries. A report made to the 
National Fraternal Congress in 1906 made clear that during 
the year 1905, with a membership of 3,634,467, the increase 
in membership was only 58,344. Eighteen of the most 
important fraternals gained during 1905 only 96,877 new 
members and lost 106,373. The attorney and counsellor 
of one of the great societies has expressed very strongly 
the judgment of the competent leaders in favor of suitable 
state control and disclosed the nature of the crisis: 

I do not believe that it is safe that the fraternal beneficiary 
societies be left longer without proper legislative guidance in the 
matter of rates. I am sure that the officers and managers of frater- 
nal societies recognize that relief must come soon, and that it must 
come from legislative enactments. It is nearly impossible for one or 
a few societies to adopt and apply adequate rates so long as other 
societies do not do so. There are a sufficiently large number of 
societies who do not yet appreciate the necessity for adequate rates 
to make it impossible to see a day in the future when all of the 
societies will have placed themselves upon a permanent basis. 

In order to meet the needs and demands of the members of these 
societies, the legislatures must designate more clearly the character of 
contracts that may be made, and benefits granted by these societies 
than they have done in the past. It is" essential to their success and 
perpetuity not only that they be required to accumulate adequate 
reserves upon level life contracts, but that provision be made whereby 
reserves are not appropriated to the benefit of persistent members, as 
in the past, but that a member who pays the reserve accumulation, 
shall recognize that he has an interest in it and that it shall be held 
sacred for the maturity of his certificate. 

I recognize that this will be a new departure in fraternalism, 
because the theory of rates in these societies has been based upon an 
agreement between the members that, even if an accumulation of 
reserve was made, the withdrawing or lapsing member should leave 



THE INSURANCE OF THE FRATERNAL SOCIETIES 123 

his interest in the accumulation in order that persistent members 
might have insurance afforded them at less than actual cost. 

It seems probable that the resolutions passed on October 
4, 1906, by the National Convention of Insurance Commis- 
sioners indicate the essential points of the reform demanded 
by the enlightened friends of the fraternal organizations. 

The laws governing fraternal societies should provide that where 
the hope of level rate is held out to the members, that such rates 
should be less than those shown as necessary by the American Experi- 
ence Table of Mortality with interest at the rate of 4 per cent, per 
annum. This will work no hardship upon the members, for any 
excess can be returned each year by an annual accounting, thus 
guaranteeing that they will not have to pay more than the actual cost 
of their insurance while providing for the hope and permanency of 

the association We urge the enactment of laws providing as 

follows: (i) No society shall be organized in or admitted to any 
state after July i, 1907, that does not collect adequate rates, accord- 
ing to the above-mentioned standard. (2) All societies doing business 
in any state should collect adequate rates from new members admitted 
after January i, 1909. (3) Members paying inadequate rates should 
be placed in a class by themselves, but should be permitted to transfer 
to the adequate rate class at attained ages," without expense or medical 
examination, within two years, and the funds of the two classes 
should be kept separate 8 

The above report was signed by the Insurance Commis- 
sioners of Illinois, Pennsylvania, Maine, Kentucky, Missis- 
sippi, New Jersey, and Wisconsin, composing the Committee 
of Fraternal Insurance; and the report was unanimously 
adopted. 

The opinion of M. M. Dawson, the actuary, is worth 
citing. He believes that the reorganization now going on 
in the fraternal societies is sincere; that the leaders are in 
touch with actuaries and will ultimately be supported by 
the members; that the administration is honest and eco- 

8 Carlos S. Hardy, What Is Necessary for the Future of Fraternal 
Societies? 1906. 



124 INDUSTRIAL INSURANCE 

nomical; that the medical selection is good; that the rates 
are being adjusted to the losses and the necessary reserves 
are being provided; that after the shock of reorganization 
the numbers will increase. 9 

A rather intensive study of the working of fraternal 
lodges in the anthracite coal region has been made by Mr. 
P. Roberts, 10 and from that account certain illustrations are 
taken. In this region are found representatives of most of 
the countries of Europe. Roberts says that in the cities and 
towns there are some brotherhoods whose chief object is the 
cultivation of sociability, and the members of such lodges 
belong to the comfortable classes and to the professional 
people. But the brotherhoods of miners pursue a more 
practical and utilitarian object and their principal purpose 
is to provide sick benefits and life insurance for the protec- 
tion of their families. These miners are not rich enough to 
spend much money on purely sociable organizations. They 
have a special repugnance to being buried at public cost, and 
they pay their dues regularly in order to be sure of the death 
benefit when it is needed. Beyond these two emergencies 
the average miner does not give himself great anxiety. An 
experienced insurance agent acquainted with these people 
estimates that 75 per cent, of the workmen pay insurance 
premiums, about 25 per cent, paying sick insurance prem- 
iums and 50 per cent, for life insurance on policies ranging 
from $100 to $300. All the brotherhoods have a religious 
basis, the Catholic societies having a close relation with the 
ancient church and having priests as leaders. The Slav 
miners have many societies which bear the names of race 
heroes or saints. Ordinarily these brotherhoods give sick 
benefits and burial money. The Irish and Slav beneficial 

Annals of American Academy of Political and Social Science, 1905, 
pp. 128 ff. 

10 Anthracite Coal Communities, pp. 259 f. 



THE INSURANCE OF THE FRATERNAL SOCIETIES 125 

societies have female members, and among the Protestant 
orders are auxiliary societies for women, as, for example, 
the Daughters of Rebecca, Daughters of Pocahontas, etc. 
The Catholic orders are not so numerous and are divided as 
the Protestant, and therefore the Catholic lodges are usually 
stronger financially. The individualistic spirit among 
Protestants shows itself in the brotherhoods, as well as in 
the churches, and this fact makes the insurance burden 
heavier for their members. The financial administration 
of the lodges rests in the hands of the members and these 
officials handle considerable sums in the course of a year. 
The fact that betrayal of trust is very rare speaks well for 
the character of the workmen. It is impossible to make an 
exact statement of the income and expenditures of the 
brotherhoods of the region. In the neighborhood of Oly- 
phant, with 7,800 inhabitants, it is estimated that the 
monthly payments are about $1,886. The monthly dues for 
each member range from 25 to 60 cents. When a member 
dies an assessment is levied of $i to cover the death benefit. 
In the cities of the anthracite region the fraternal orders 
flourish, and it is thought that their yearly receipts are 
about $1,250,000. The weekly allowances for sick benefits 
range from $4 to $6 and receipt of benefits ceases with the 
third or at most the sixth month. After the first half of 
the period the benefit is reduced one-half and at the end of 
the limit all claims cease. After that the indigent member 
has no recourse but poor relief. In case of the death of a 
member the family receives from $50 to $125 death benefit, 
and the man whose wife dies receives half these rates for 
burial expenses. Roberts sees distinct advantage in the 
insurance work of these brotherhoods. The workmen find 
in the administration of the business of the lodge a great 
satisfaction. The business sessions call for discussions and 
explanations, for courteous conduct and tactful speech with 



126 INDUSTRIAL INSURANCE 

much self-control under provocation; and this experience 
tends to enlarge the scope of thought, awaken the mind, 
and refine the manners. Independence, self -trust, and fore- 
sight are qualities which elevate the social condition of 
workingmen, and in no circle of activity are these qualities 
so developed as in the meetings and business of the brother- 
hoods. 

And yet these lodges reveal various defects. They are 
so split up into numerous small bodies that much of the 
energies and funds of the members are wasted. By com- 
bination and federation the efficiency of the societies would 
without doubt be promoted and the basis for security made 
deeper and broader. If the local risk could be joined with 
that of a wide area the insurance would rest upon a firmer 
basis in times of local epidemics. 

Ordinarily we find in the statutes of the organizations a 
provision similar to that formerly a part of the German 
sickness insurance law, to the effect that insured persons 
who have become ill through their own fault, as by engag- 
ing voluntarily in fights, or by drunkenness, or venereal 
vice, lose their claim for benefit or at least lose it in part. 
The society protects itself against fraud by means of ex- 
aminations made by a physician or by visits of committees. 
When a man is member of several societies and the sum of 
benefits is greater than wages he is tempted to stimulate 
sickness in order to have a vacation at the expense of the 
funds. Some of the brotherhoods avoid this danger by 
having an understanding between the brotherhoods that 
the sum of all benefits shall not be greater than wages. This 
precaution is not always followed and neglect leads to 
occasional abuses. 

The negroes have imitated the whites in the organiza- 
tion of fraternal benefit societies and their methods have 
peculiarities which correspond to race traits. When we 



THE INSURANCE OF THE FRATERNAL SOCIETIES 127 

consider the situation of the millions of these "brothers 
in ebony" who stand in sore need of insurance, without 
legal organization or protection, we can more easily com- 
prehend the force of an argument for a national movement 
for compulsory insurance. For the negroes themselves 
compulsory insurance would be a school of economy and 
thrift. As a matter of fact many thousand of this race 
remain without any sort of aid in times of sickness and un- 
employment and they either become a burden on poor relief 
or suffer the effects of semi-starvation. As an illustration 
of certain aspects of their societies we may cite a picture 
from a letter from Nashville, Tenn., by Miss Mary Woods, 
dated July 8, 1906 : 

There are many brotherhoods among the colored people. The 
Ladies of Queen Esther's Court on festival occasions wear purple hats 
and their queen wears a crown. At the funeral services of members 
there are ceremonies which remind one of children's plays. All the 
brotherhoods pay sick benefits and death benefits. Of late reports of 
dishonest treasurers have not been frequent, but formerly they were 
common, and probably there is still much imposition. The poor 
things are ignorant and easily fall victims to designing and shrewd 
men. One impostor was preacher, undertaker, and owner of a vault 
and cemetery. His enemies say that he had formed a partnership 
with certain physicians and hospitals by which he gained still more 
from the unfortunate people over whom he had gained power. 11 

11 Much detailed information about the actuarial problems of the fra- 
ternal societies is found in the Consolidated Chart (published by the 
Fraternal Monitor, Rochester, N. Y.) : in Analyses of Fraternal Societies 
and Illustrations of Premium Computations, by Abb Landis, 1906; in 
Friendly Societies and Fraternal Orders, by Abb Landis ; and in Insur- 
ance, by W. A. Fricke, 1898 ; in papers of A. Warnock, F. A. Betts, M.D. 
Campbell, W. A. Fricke. 



CHAPTER V 
THE EMPLOYERS' LIABILITY LAW 

The only forms of strictly legal relief of workingmen, 
in case of incapacity for labor caused by accidents, are poor 
relief and indemnity secured under the law which makes 
employers liable for damages caused their employees 
through negligence on the part of the employers. The right 
to poor relief is not one which can be enforced by legal 
process, and when such aid is granted it is insufficient, hu- 
miliating, and destructive of self-respect, so that it is 
dreaded and hated by every man who is not already pauper- 
ized in spirit. We have here to outline the chief facts in 
relation to the rights of injured workingmen under the 
liability law. 1 

I. THE LAW 

The basis of all legislation and "judge-made law" in this 
field is the ancient English common law governing relations 
of masters and servants. According to that law the em- 
ployee upon entering service was supposed to assume the 

1 References : F. J. Stimson, Handbook to the Labor Law, 1895, pp. 
161 ff. ; Report of the Committee on Relations between Employer and 
Employee, Massachusetts (1904) ; Tenth Special Report of the Commis- 
sioner of Labor, Labor Laws (1904), and later Bulletins of the Bureau of 
Labor; S. D. Fessenden, "Employers' Liability in the United States," 
Bulletin of the Department of Labor, No. 31, November, 1900; E. Freund, 
Police Power, sees. 322, 633 ; C. B. Labatt, Commentaries on the Law of 
Master and Servant (1904) ; W. G. Clay, Abstract of the Law of Employ- 
ers' Liability and Insurance against Accidents (1897) ; Annual Report of 
New York Labor Statistics (1899), Vol. XVII, pp. 555-1162; C. Reno, 
Law of the Employers' Liability Acts (2d ed., 1903) ; Industrial Com- 
mission, Report, Vol. V, pp. 76-87, Vol. XVII, pp. 970-1135, Vol. XIX, 
PP- 93 2 -39 J Bulletin of the Department of Labor, No. 40 (Weber) ; H. A. 
Schaffner, Railroad Coemployment (1905). 

128 



THE EMPLOYERS' LIABILITY LAW 129 

ordinary risks of the occupation the doctrine of "assump- 
tion of risk." It was thought that a free man entering into 
a contract of service would usually be acquainted with the 
dangers attending that occupation and would have no claim 
upon his employer if he were injured. If, however, there 
were extraordinary dangers which should be known by the 
manager but not by the employee, such risks were not sup- 
posed to be assumed. It would be the duty of the employer 
to make these unusual dangers known to the workman, and 
if he failed to do so and harm resulted, the employer would 
be liable. 

Another famous doctrine was the "fellow-servant" in- 
terpretation. According to this principle the employer could 
not be required to pay indemnity to an injured workman if 
the accident and hurt came from the carelessness of a com- 
panion in the service. This doctrine is of comparatively 
recent origin. About the year 1840 this rule was developed 
by courts in England and in the United States and employers 
were exempted by judicial decisions from payment of 
damages where the fault lay with a fellow-workman. Nor 
was this unnatural, if one starts from the idea of personal 
culpability; for in no proper sense is an employer directly 
to blame for an injury caused by another. The fact that 
the principle works hardship indicates a fault in the law 
itself not in its logical application. 2 

There is another aspect of the case, however, which 
introduces doubt ; the employer is responsible for his agents, 
since he selects them and may be negligent in this selection 
and in giving them power to control the action and fortunes 
of subordinated workmen. In this view the negligence of 
a fellow-servant who is in position of director of others is 
the fault of the original manager and proprietor. Many 

2 Pollock, Law of Torts, 7th ed., p. 96; Field, U. S. Supreme Court 
Reports (112 U. S.), p. 3867. 



130 INDUSTRIAL INSURANCE 

decisions have turned on this fact and made the employer 
liable for indemnity if the fellow-servant was unfit for his 
position, incompetent, drunken, or negligent so as to cause 
injury. It is not strange that judicial opinions should differ 
and that the course of legislation should be crooked. Thus 
we have in one direction the language of Justice Field (C. 
M. and St. Paul Railway Company vs. Ross, 1884, 112 
U. S., 377) ; in holding that a corporation should be held 
responsible for the acts of a servant exercising control and 
management : 

He is in fact, and should be treated as, the personal representative 
of the corporation, for whose negligence it is responsible to subordi- 
nate servants. This view of his relation to the corporation seems to 
us a reasonable and just one and it will insure more care in the selec- 
tion of such agents, and thus give greater security to the servants 
engaged under him in an employment requiring the utmost vigilance 
on their part, and prompt and unhesitating obedience to his orders. 

The United States is the only country now where this 
labored dispute has any significance; for with the introduc- 
tion of the laws relating to the absolute liability of employ- 
ers without regard to negligence and with the compulsory 
insurance laws the idea of negligence of fellow-servants 
has no meaning. 

It is the duty of employers, under the common law, to 
provide in a reasonable way such machinery, buildings, and 
appliances as will insure safety. Only ordinary care is 
obligatory and the law does not demand the impossible in 
asking absolute security against harm, nor even the use of 
the most recent and costly devices, but only such as are 
found in a well-arranged establishment. If a defect is 
known to exist the employer is not held liable, although he 
may be required to give indemnity if it is shown that the 
injured workman has repeatedly called attention to the 
danger and asked for protection. 



THE EMPLOYERS' LIABILITY LAW 131 

Another rule is that of "contributory negligence;" an 
injured workman in order to recover damages must prove 
that he did not bring harm to himself by his own careless- 
ness. The employer is under obligations to instruct a new 
employee in regard to any special dangers of the occupation, 
and this requirement is more strict where the employee is 
young, inexperienced, or of inferior mental capacity. 

According to the common-law rule a difference is made 
between the case where the employee is instantly killed and 
that where he survives for a time. In the former case the 
legal representatives of the victim cannot recover damages 
from a negligent employer. This rule has been modified in 
the statutes of some states. It is said that an action for dam- 
ages on account of homicide could not be maintained prior, 
to Lord Campbell's Act in 1846 (9 and 10 Victoria, B. C. 

93)- 

A few of the states have redefined the main provisions 
of the common law. In some states only corporations, and 
in others all employers, are liable for injuries to employees 
caused by defects in machinery of plant or by negligence 
of employers or their representatives. 3 California and 
Montana, which have adopted the general codes prepared by 
the late David Dudley Field, attempt to recast the common 
law in still greater detail. 4 

Gradually the common law has been displaced or pro- 
foundly modified by statutes as well as by judicial interpre- 
tations. On the whole the changes have been in the 
direction of making the law more severe for the employer 
and to extend the protection of the workingmen. In order 
to counteract the tendency among employers to induce or 
require their employees to release them from liability by a 

8 Mass., 1894, 499; Col., 1893, 77', Ind., 7083; Ala., 2590. 
* Stimson, op. cit. 



132 INDUSTRIAL INSURANCE 

contract clause in the agreement to hire, some states have 
enacted statutes making it illegal to make such contracts; 
but the courts have annulled them even in the absence of 
express statute. 

In order to correct the injustice of the common law 
which denied indemnity in case the workman was instantly 
killed, a law has been passed, as in Massachusetts, securing 
for the survivors right of action in a case where such right 
would have existed had the person lived for some time after 
the accident. The amount which can be recovered may or 
may not be fixed by the statute. 

The Employers' Liability Act of Massachusetts, as 
summarized by the commission of 1903, may be taken to rep- 
resent the effort of legislators to extend the right of 
employees to recover damages. According to this statute 
employees may recover for any defect in the condition of 
the ways, works, or machinery of the employer caused by 
negligence of the employer or of some one in his employ 
whose duty it was to see that the same were in proper con- 
dition or properly repaired. Employees may recover for the 
negligence of a superintendent, or of one acting as superin- 
tendent under the authority of the employer. On railroads 
the company is liable to the employee injured through the 
negligence of a person having the charge of any signal, 
switch, locomotive, engine, or train. In the event of the 
death of the employee his legal representatives have the 
right to recover damages against the company. If death 
was not instantaneous, or was accompanied by conscious 
suffering, the widow, and if no widow the next of kin. 
dependent on the employee at his decease, may recover 
damages against the company. If there are two suits, one 
by the legal representatives and one by the widow or next 
of kin, the total amount recovered shall not exceed $5,000, 



THE EMPLOYERS' LIABILITY LAW 133 

to be apportioned by the jury. In the laws of some states 
the sum which may be recovered is not fixed or limited, but 
left to the discretion of the jury. Employees themselves 
suing under this act can recover an amount not exceeding 
$4,000. In any case under this act resulting in death, which 
follows instantaneously or without conscious suffering, the 
amount recoverable is not less than $500 and not more than 
$5,000, to be assessed according to the degree of negligence 
of the person for whose negligence he is made liable. Notice 
must be given the employer within a given period after the 
accident. Employees working for subcontractors upon the 
machinery, ways, works, or plant of the employer have the 
same rights against the employer as have other employees. 
To have right to recover indemnity the employee must have 
given due notice of the defect which caused his injury. An 
employer who has contributed to certain insurance funds 
for the benefit of injured employees may prove in mitigation 
of damages recoverable by an injured employee under this 
act, the proportion contributed by him to the benefit received 
by such employee. This act does not apply to injuries 
caused to domestic servants or farm laborers by fellow- 
employees. 

Contracting out. Even without statute it would appear 
to be illegal to make a contract releasing the employer from 
his common-law responsibilities; but some states have en- 
acted laws expressly nullifying such contracts, with the 
purpose of preventing employers from using their superior 
power as employers to make such agreements the basis of 
granting employment. 5 In some states such contracts are 
void only where the injuries arise from the negligence of 
the employer or of someone who represents him. 6 

5 Ohio, 1890, p. 149; Ind., 7083; Tex., 1891, 24; Wy. Const., 10, 4; 
1891, 28; Flor., 2346; in Ohio the law applies to railroads only. 
"Mass., 1894, 508, 6; Ala., 2590; Minn., 1887, 13. 



INDUSTRIAL INSURANCE 



II. CRITICISM OF LIABILITY LAW 

It is almost universally agreed among persons of ex- 
perience that the liability laws, whether common or statute, 
are not satisfactory to either employers or to the employed. 
On the one hand we hear complaints from the employers 
who affirm that legislatures, under pressure from trade 
unions, are steadily making statutes more drastic and severe 
upon employers and more favorable to employees; that 
juries award verdicts without regard to justice, measured 
more by what the defendant can pay than by the earning 
power of the person who has suffered loss; that employees 
are more eager to resort to litigation and persistent in press- 
ing suits; that dishonest lawyers take advantage of the 
situation and for contingent fees urge injured workmen to 
prosecute claims, many of which are without foundation in 
justice; that to protect themselves from ruinous risks they 
are compelled to pay enormous sums to casualty companies 
for premiums, and even then cannot afford to pay premiums 
large enough to carry the entire risk; that employers of 
moderate means may be crippled or utterly ruined by the 
awards of juries and by the costs of litigation. 

On the other hand the employees offer objections from 
their point of view. They assert that they are denied speedy 
trial in courts, owing to the crowded condition of dockets 
and the tricks of attorneys of defendants ; that in addition to 
their employers they must fight powerful insurance com- 
panies who resist their claims to the bitter end; that these 
companies are even more pitiless than the employers; that 
an ordinary workman has no chance when pitted against 
the shrewd claim agents, expert attorneys of employers, and 
insurance companies; that before they can hope to recover 
damages years of deprivation and misery must pass while 
the suit is appealed from court to court and their rights 
are denied; and that even if they are fortunate enough to 



THE EMPLOYERS' LIABILITY LAW 135 

recover indemnity, after long waiting and suffering, the 
costs of litigation have consumed most of the award. 
Meantime they have been kept out of the interest on what 
was justly due them. An extreme instance is known to the 
writer where a great corporation, after twenty-one years of 
resistance was finally compelled to pay, but meantime the 
interest which they retained was equal to the full amount 
of the award to which the injured man had a right from the 
moment he was hurt. 

in. EMPLOYERS' LIABILITY INSURANCE COMPANIES 

A natural product of the working of liability laws, 
under modern economic conditions, is the rapid and enor- 
mous growth of private companies which undertake to 
relieve employers from the dangers and burdens of lawsuits 
instituted by injured workmen or by the heirs of those killed 
in industrial accidents. We have said that this form of 
insurance is a natural outgrowth of the situation, artificially 
created by the law, an inevitable effort to protect the solv- 
ency of employers against the ruinous effects of damage 
suits. The employers offer a defense of their action which 
is relatively just and yet sounds like an indictment of the 
law itself. They say, that without such insurance their 
business credit might be hopelessly compromised; that a 
certain class of lawyers, known as "ambulance chasers," 
lurk about the neighborhood of works where accidents are 
frequent with the hope of securing clients by offering their 
services without hope of fees unless a suit is won for the 
poor plaintiff, in which case he takes the lion's share of the 
award, while the workman receives a paltry sum. In sheer 
self-defense they resort to the insurance company for pro- 
tection. When a workman refuses to make settlement with- 
out litigation they feel justified in turning him over to the 
tender mercies of the foreign corporation and let them 



136 INDUSTRIAL INSURANCE 

fight out the battle. Even so the employer is not entirely 
free from danger, since in practice he does not feel able to 
pay the premium required to purchase entire immunity, and 
sometimes, as in a case where the award is $20,000 and the 
policy guarantees only $5,000 the employer may be severely 
worsted after all. 

The extent and cost of employers' liability insurance 
may be seen from the following figures. In the five years 
between 1894 and 1898 ten companies received in premiums 
from employers $19,401,511 and paid out in losses $9,382,- 
689; the premiums received were more than twice the pay- 
ments for protection. 

How much of this $9,382,689, after paying their law- 
yers, ever reaches the workingmen for whom the law 
intended it should be paid ? 7 In the state of Illinois, in one 
year, 15 of these companies collected in premiums from 
employers $1,825,467.51 and paid claims to the amount of 
$876,940.95. 8 It must not be supposed from these figures 
that the insurance companies are reaping inordinate profits 
from these transactions, and we may accept their explana- 
tion of the figures that the expenses of doing business are 
actually extremely great. It is claimed by friends of the 
companies that the rate of commission alone for securing 
business will average between 25 and 30 per cent., to which 
must be added salaries and traveling expenses of special 
agents; rent and other expenses of branch offices; cost of 
surveys and inspections; home office expenses; rent, clerk 
hire, and a multitude of other small charges; so that the 
expenses average about 50 per cent, of the premiums, and 
the margin of profit left is about 10 per cent, of receipts. 9 

''Report of Industrial Commission, Vol. VII, p. 78. 

8 Thirty-seventh Report of Insurance Superintendent of Illinois, 1905, 
p. xvii. 

9 W. F. Moore, "Liability Insurance," Insurance, published by Annals 
of American Academy, pp. 328, 330. 



THE EMPLOYERS' LIABILITY LAW 137 

When we compare this enormous cost with that of German 
compulsory accident insurance, or even with that of French 
syndicates or private companies under recent laws, we can 
see that the industry of this country is subjected to a burden 
which is beyond reason; and it does not seem possible that 
a large body of shrewd business men will very long tolerate 
such a law and the conditions which it creates. 

This form of insurance began to be used about 1887, 
and the volume of business increased from $150,000 in that 
year to $14,700,000 in 1904; but these figures include all 
kinds of liability policies excepting steam boiler policies. 

IV. INDIRECT CONSEQUENCES 

One effect of the employers' liability laws, in connection 
with other motives, is the very common custom of paying 
the expenses of medical care after an accident, and even of 
continuing the wages or part of them during temporary 
incapacity. How far this custom extends it is impossible 
to determine, but correspondence proves that it is quite wide 
and rapidly growing. One example may be cited. In the 
state of Michigan during the year 1905, according to the 
report of the Bureau of Industrial Statistics, reports were 
secured on this subject in relation to more than 400 cases of 
accidents in factories and workshops in the state. The 
average duration of disability was 33 days. Out of 348 
injured workmen 172 of them received their wages during 
the time of disability. 10 Only in part is this beneficent action 
due to purely philanthropic motives; probably we must 
suppose the constant pressure of fear of damage suits on 
the part of employees urged on by lawyers in quest of con- 
tingent fees. As quickly as possible after an accident the 
representatives of the firm visit the wounded man, show 

10 Twenty-third Annual Report of the Labor and Industrial Statistics 
of Michigan, 1906. 



138 INDUSTRIAL INSURANCE 

him kindly attention, provide for urgent needs, or send 
him to a hospital. In due time, not always immediately 
upon the heels of the conciliating gift, comes the legal agent 
of the firm with a document for the employee to sign giving 
a full release from all liability in consequence of any possible 
neglect on the part of the employers. As a rule there is 
no legal claim, and the contribution is a pure gratuity, but 
experience shows that such "smart money" has a soothing 
and conciliatory effect upon the mind of the injured man. 
Furthermore there is economic advantage in securing 
prompt surgical and medical care, because the chances of 
certain and speedy recovery of a wounded workman are 
increased by such measures. Of course the employee profits 
by the custom. But he has no legal claim, and the charity 
feature is objectionable and irritating. 

The establishment of benefit clubs in factories and shops, 
with or without subsidies from the employers, as described 
in another chapter, is often largely due to the natural and 
proper desire of employers to avoid the irritation which 
increases friction and so litigation. Here also the percep- 
tion of the value of timely and competent medical care in 
restoring and conserving the industrial efficiency of workers 
has much to do with the favorable attitude toward such 
organizations. The humane motive must also have its place. 
It has been asserted, though without adequate data for 
proof, that many of the great railroads and other corpora- 
tions already, and without legal requirement, pay out in 
benefits to wounded workmen all that they would be required 
to do under the British Compensation Act. All of these 
facts go to show that, under the liability law, the cost and 
burden of insurance is already quite heavy on employers, 
and that the burden would for many of them not be greatly 
increased if the compulsory insurance of workingmen were 
at once introduced. But the measures just described are 



THE EMPLOYERS' LIABILITY LAW 139 

without true legal authority and are for this reason not 
socially equal nor fairly distributed. It is natural that some 
more satisfactory legal method should be sought. 

V. THE MASSACHUSETTS BILL 

On January 13, 1904, a very competent committee rec- 
ommended to the legislature of Massachusetts a modified 
form of the British Compensation Act of 1897. The legis- 
lature had, on June 5, 1903, instructed the governor to 
appoint this committee of five persons to make recommenda- 
tions for laws on the relations between employer and 
employee. The text of the bill offered by them was printed 
in their report. This bill was rejected and nothing was 
done, and yet the discussion thus awakened served an im- 
portant educational purpose and public opinion was strongly 
directed to the problem. 

Serious and perhaps insurmountable legal objections 
have been urged against this bill. The proposed law has 
been summarized and criticized very clearly and strongly 
by Professor E. Freund: 

The bill makes every employer belonging to one of the classes 
specified by it liable for any personal injury happening to an employee 
while performing duties growing out of or incidental to his employ- 
ment, unless the injury is due to the employee's own wilful or fraudu- 
lent misconduct. The employment must be on, or in, or about a 
railroad, a street railway, a factory, a workshop, a warehouse, a mine, 
a quarry, engineering work, or any building which is being con- 
structed, repaired, altered, or improved by means of a scaffolding, 
temporary staging or ladder, or being demolished, or on which 
machinery driven by steam, water, or other mechanical power is being 
used for the purpose of the construction, repair, or demolition thereof. 
The act provides for the payment of lump sums in case of death, 
and- for weekly payments in case of total or partial incapacity. Maxi- 
mum amounts are fixed, and the weekly payments are subject to 
review from time to time. All questions arising under the act as to 
liability to pay, or amount or duration of compensation, are to be 



14 INDUSTRIAL INSURANCE 

settled by arbitration. The employee has his option to proceed inde- 
pendently of the act. to recover damages, where he has a cause of 
action by common law or by other statutes. 11 

Professor Freund and others have raised the following 
constitutional objections to this form of law: (a) The bill 
makes no provision for trial by jury, leaving the settlement 
in disputed questions to arbitration; (&') There seems to be 
no principle of classification in determining the occupations 
included in the bill or excluded from its operations; (c) It 
is objected that this bill lays an unjust and intolerable bur- 
den on the employer of small means and income, making 
his liability absolute although his ability to meet the demand 
in case of serious accident is not comparable with that of 
rich corporations. All these errors can be corrected in a 
revised bill. "The necessary provision for jury trial would 
probably not seriously interfere with the operation of the 
act; a more intelligible principle of selection of employ- 
ments could easily be found; and, above all, employers on 
a small scale should be relieved." 

A somewhat different line of objections has been brought 
forward by other legal authorities. Thus it has been at- 
tacked on the ground that it is class legislation and casts 
upon employers of certain selected classes a burden not im- 
posed on others. In proof and illustration of this contention 
the decision of the Supreme Court of Illinois is cited : 

Liberty, as that term is used in the constitution, means not only 
freedom of the citizen from servitude and restraint, but is deemed to 
embrace the right of every man to be free in the use of his powers 
and faculties and to adopt and pursue such avocation or calling as he 
may choose, subject only to the restraints necessary to secure the 
common welfare. 12 

11 Green Bag, February, 1907, pp. 80 ff. 

"Braceville Coal Co. vs. People, 147 111., 660; Bassette vs. the People, 
193 111., 344; Powell vs. Pennsylvania, 127 U. S., 678; Allgeyer vs. La., 
165 U. S., 578. 



THE EMPLOYERS' LIABILITY LAW 141 

These cases show that legislative enactment cannot 
deprive a man of his right to pursue his calling in his own 
way so long as he does not encroach upon the rights of 
others. As an exampfe the case is cited where a statute 
prohibiting contractors to allow their employees to work 
more than eight hours a day on public work was held un- 
constitutional. 13 It is affirmed, in the same course of argu- 
ment, that the police power of the state cannot be made to 
cover legislation not necessary to the health and safety or 
welfare of the community. One might be justified in reply- 
ing to this argument that it is precisely the health, preserva- 
tion, and welfare of the people which is the object of this 
legislation. 

Another objection to the compensation law is based on 
the idea that, if its enactment meant the repeal of the right 
to secure redress for injury due to the employers' negligence, 
it would be unconstitutional because it would deprive the 
employee of a remedy which he now has under the common 
law. This form of the argument has much weight with 
employees and hinders the progress of progressive legisla- 
tion in the direction of insurance. It would be amusing if 
it were not so tragically serious to hear what legal principle 
is quoted in this connection; the splendid periods of the 
Bill of Rights are introduced to give solemn weight to the 
argument for the common law as against modern insurance 
laws which offer a vastly more adequate remedy not only 
in case of negligence but in all cases of accidents. It sounds 
like sarcasm to quote these words and then bring them into 
connection with the daily facts of life in any industrial city 
of this country. The fundamental ethical principle is 
indeed worthily expressed : 

Every person ought to find a certain remedy in the laws for all 
injuries and wrongs which he may receive in his person, property, or 
13 Bailey vs. the People, 190 111., 28. 



142 INDUSTRIAL INSURANCE 

reputation. He ought to obtain it by law, right, and justice freely 
and without being obliged to purchase it, completely and without 
denial, promptly, and without delay. 

This is the sublime doctrine of our law; but what is the 
brute fact familiar to the very judges who cite these sonor- 
ous phrases in instructing juries and rendering awards? 
Every one of them knows, and many of them confess with 
shame, that the actual working of the law is in constant 
and notorious contradiction with every phrase; in practice 
there is burdensome cost to the workman who sues, and he 
must pay his attorney perhaps half of the award to conduct 
his suit; the delay leaves the disabled man for at least two 
years without resources, although the law gives him a right 
to instant succor; the issue is not certain, but a mere gam- 
bler's chance; and in the vast majority of cases, that is 
those not traceable to negligence of the employer, yet due to 
the occupation itself, the workman has not even the promise 
of legal relief. The situation has a natural tendency to 
make every workman regard laws and courts as his natural 
enemies, and this has really been the effect, until there is 
positive hostility to these salutary institutions. There is no 
cure for this hostility in quotations from venerable docu- 
ments to which actual experience gives the lie direct. 

Beneath the juristic objections are certain economic 
difficulties which give meaning to the legal criticism of the 
compensation or absolute liability principle. These objec- 
tions were successfully urged by the manufacturers of 
Massachusetts and were influential in the defeat of the bill 
before the legislature. In the United States there is entire 
freedom of trade between states and competition is unre- 
stricted by state barriers. The employers, assuming that 
the cost of insurance is a financial burden or that compensa- 
tion without reference to negligence would be, declare that 
the premiums for insurance would handicap the employers 



THE EMPLOYERS' LIABILITY LAW 143 

of the state which should adopt the law in their competition 
with employers in similar lines in other states. It is difficult 
to prove that this objection is without weight. Elsewhere 
the various aspects of this problem are considered, but the 
difficulty if not impossibility of securing national and 
thereby uniform and equal requirements makes a satis- 
factory solution very remote. 

VI. EFFORTS TO FIND A WAY OUT 

There are some encouraging aspects of the situation. It 
will still be possible, undc* judicial rulings, to make insur- 
ance contracts of a certain kind which may develop a system 
of voluntary protection much more satisfactory than any- 
thing yet known. It is quite clear that an employer 
under the law may make a contract with his employees 
which will release him from common law liabilities in cases 
where the injured employee accepts the terms after the 
accident. But it is not yet clear that an employee can con- 
tract out of his rights as a condition of employment or even 
in advance of actual injury. 14 Insurance arrangements of 
the relief departments of the railroad companies are on the 
basis of these legal principles. In the bill offered by the 
Industrial Insurance Commission of Illinois in 1907 another 
method was recommended : to offer to employers who would 
contribute at least half the cost of accident insurance im- 
munity from all other liabilities, in case they could induce 
their employees to sign a contract to accept these terms. It 
was thought by the commission that the freedom from un- 
certain liabilities and danger of vexatious and costly litiga- 
tion would be inducement enough for most important 
employers to adopt this course without further legal con- 
straint. On the other hand it was hoped that the employees 
would see it to be to their interest to agree to such a contract 

"See 77 N. E. Rep., p. 248; 169 111., 312. 



144 INDUSTRIAL INSURANCE 

since they would thus be assured of a certain indemnity or 
benefit in all cases of injury, whether there was show of 
cause under the plea of negligence or not, and thus they 
would have absolute protection in all forms of disability 
without losing employment and without paying half or 
more of rare awards for lawyers' fees. It is not yet known 
whether the employees will take this view of the matter, nor 
what the legislature will do, nor what the courts would do 
in case a law of this kind were put to test. But the Com- 
mission was advised by some of the most competent auth- 
orities in the country that the essential features of the bill 
were legally and actuarially, sound and would, if accepted 
in good faith, relieve the situation and be a substantial 
benefit to employers, employees and to the general public.^ 
If this is true the idea will yet be tried in some states and 
have a chance to prove its worth. The Illinois bill left the 
method of insurance optional with the contracting parties, 
that is with the employers ; and the employer might select a 
casualty company to provide the machinery for protection, 
or might under suitable conditions create his own insurance 
fund, or might join with others in the formation of a mutual 
insurance association. It would be unwise to exclude 
casualty companies from this business in the present situa- 
tion and equally unwise to give them a monopoly of the 
business. 

In the year 1899 an effort was made in New York to 
introduce some insurance measure, but it failed on account 
of the contemporaneous demand for more stringent liability 
law. The bill offered included the British principle .of 
absolute liability and compensation in all kinds of acci- 
dents. 15 

In the year 1902 Senator David J. Lewis introduced into 
the legislature of Maryland a bill intended to encourage or 

15 See article of M. M. Dawson in Railway Age, 1904, p. 415. 



THE EMPLOYERS' LIABILITY LAW 145 

practically compel employers to provide insurance for their 
employees in certain dangerous occupations. There was in 
the law a drastic provision extending the scope of liability, 
and then the employer was permitted to avoid this liability 
by paying given sums to the State Insurance Commissioner 
for the creation of a fund out of which a death indemnity 
for a thousand dollars should be paid. The law was passed 
and a number of death benefits were paid out by the Insur- 
ance Commissioner. It was declared unconstitutional in an 
inferior court on the ground that the law gave judicial 
powers to an administrative officer. No case has been 
carried up to the Court of Appeals and the final test has 
not been applied. The author of the bill thinks that the 
indifference of employers to the law was due to the fact 
that the number of cases attributable to negligence is so 
small that freedom from liability under that clause is not 
sufficient motive to induce them to go to the trouble to 
insure their employees. 

In the meantime it is interesting to study the growth and 
advance of instructed minds on this subject as illustrated 
in various messages of President Roosevelt. He seems to 
have uttered his first plea in connection with an urgent 
request to Congress to grant disability and old-age pen- 
sions to members of the life-saving crews along the rivers 
and coasts. In his message of December 3, 1906, he goes 
farther and reaches the ground of the British compensation 
act of 1897: 

Among the excellent laws which the congress passed at the last 
session was an employers' liability law. 16 It was a marked step in 

16 This law has been declared unconstitutional by two courts and 
affirmed by one federal court. Judge Evans, in Kentucky, in re United 
States vs. J. M. Scott, 1906, declared adversely. A case was carried up 
to the Supreme Court and by a small majority the law was declared 
unconstitutional on a mere technicality. Subsequently congress enacted 
an amended form of the law and the President signed it. See Appendices 
B and C. 



146 INDUSTRIAL INSURANCE 

advance to get the recognition of employers' liability on the statute 
books, but the law did not go far enough. In spite of all precautions 
exercised by employers there are unavoidable accidents and even 
deaths involved in nearly every line of business connected with the 
mechanic arts. This inevitable sacrifice of life may be reduced to a 
minimum, but it cannot be completely eliminated. It is a great social 
injustice to compel the employee, or rather the family of the killed or 
disabled victim, to bear the entire burden of an inevitable sacrifice. 
In other words, society shirks its duty by laying the whole cost on the 
victim, whereas the injury comes from what may be called the legiti- 
mate risks of the trade. Compensation for accidents or deaths due 
in any line of industry to the actual conditions under which that 
industry is carried on should be paid by that portion of the community 
for the benefit of which the industry is carried on that is, by those 
who profit by the industry. If the entire trade risk ia placed upon the 
employer he will promptly and properly add it to the legitimate cost 
of the production and assess it proportionately upon the consumers of 
his commodity. It is therefore clear to my mind that the law should 
place this entire risk of trade upon the employer. Neither the federal 
law nor, as far as I am informed, the state laws dealing with the 
question of employers' liability are sufficiently thoroughgoing. 

Still more recently in a speech at the Jamestown Expo- 
sition, June n, 1907, President Roosevelt has been even 
more explicit and published the opinions which no doubt 
have long been waiting in his fertile mind for the right 
moment for utterance in a responsible way: "Workmen 
should receive a certain definite and limited compensation 
for all accidents in industry, irrespective of negligence." 
This doctrine he would have Congress apply at once in 
statutes governing railroads; no doubt with the hope that 
state legislatures would speedily follow the example set by 
the federal legislature. 

On May 30, 1908, President Roosevelt had the satisfac- 
tion of approving a bill which, for the first time in our 
history, distinctly and fully recognizes in law the moral obli- 
gation of the state to provide compensation for injuries due 
to the hazard of occupation; it is H. R. 21844, "An Act 



THE EMPLOYERS' LIABILITY LAW 147 

granting to certain employees of the United States the right 
to receive from it compensation for injuries sustained in the 
course of their employment." (See the text in Appendix C.) 
The genial and humane manufacturer and politician, 
Mayor S. M. Jones of Toledo, "Golden Rule Jones," is 
quoted as follows : 

Whenever a crank-shaft, a gear, a pinion, or any part of a 
machine is broken, it must be replaced. When a machine is worn out 
and a new one must take its place, the expense of these repairs and 
replacements, of course, is charged to the business. That is figured 
as a part of the cost of carrying on the business. 

To a very great extent a man has been looked upon as of less 
importance than a machine. Men by the thousands are annually 
maimed, crippled, disfigured, and killed in the service of the fac- 
tories, shops, mills, and railways of the United States with scarcely 
a thought being given to the subject of making good the injury, and 
the rule is that the poor man who has lost a finger, a hand, an eye, 
an arm, or a leg, when by reason of these defects he is no longer 
useful, is turned out to shift for himself, and very often both he and 
his family are made dependent upon the public charities for a liveli- 
hood If a business must provide margin enough to repair 

broken and renew worn-out ones, why should it not provide for a 
broken leg, a crushed foot or hand, by paying to such injured person 
his regular wages during the time of his enforced suffering and 
idleness? And when the breadwinner of a family is killed, why 
should not the business that killed him take the place of the bread- 
winner as far as possible by providing for the material wants of the 
family that was dependent upon him? .... I believe that business 
should provide for such emergencies; and furthermore, that as we 
become humanized it will be considered a legitimate part of the 
necessary expense of carrying on any business." 

At this point we may well consider the argument and 
recommendations of the Bureau of Labor and Industrial 
Statistics of Wisconsin (Report of 1908, pp. 105 ff.) : The 
cost of the existing system to the employer varies with the 
industry but averages from five-tenths to six-tenths of i 

17 Machinists' Monthly Journal, February, 1904, p. 113. 



148 INDUSTRIAL INSURANCE 

per cent, on the wage bill and from $2.50 to $2.80 per man 
per annum. This is chiefly for liability insurance premiums. 
Less than half of this money reaches the victims of accident. 
The board recommends the following principle : 

Let the employer contribute an amount which he probably would 
have to pay if he continued with the law of negligence, release him 
from liability to damage suits, and then distribute that money on the 
insurance principle, the employee being encouraged to carry as much 
additional insurance as he could. ' 

This is essentially the recommendation of the Illinois Com- 
mission. 



CHAPTER VI 

PRIVATE INSURANCE COMPANIES 
I. INDUSTRIAL LIFE INSURANCE 

The purpose of these companies, from the standpoint 
of directors and stockholders, is profit; their social end is 
to secure for the policy-holders a certain sum to provide 
for the expenses of mortal illness and for burial without 
appeal to charity. Some of these same corporations carry 
on an ordinary life-insurance business which does not in 
any important factor differ from other life-insurance agen- 
cies, and does not require special attention in this place. 1 

The vast importance and extent of the business of these 
burial insurance companies may be indicated by their statis- 
tics. In a previous part of this discussion the principal facts 
have been cited. The face promise of all policies of indus- 
trial companies in the year 1902 was $1,806,890,864. The 
number of policies was 13,448,124, and the average value 
of the policies was $135. Mr. Dryden estimated that the 

1 References : Frederick L. Hoffman, History of the Prudential Insur- 
ance Company of America, 1875-1900; Handbook and Reference Guide to 
the Exhibits of the Prudential Insurance Company of America, prepared 
for the Louisiana Purchase Exposition, St. Louis, 1904; John F. Dryden, 
The Inception and Early Problems of Industrial Insurance, 1905 ; Descrip- 
tion of Ordinary Policies of the various companies ; article on "Industrial 
Insurance," Encyclopedia Americana, by Haley Fiske, vice-president of the 
Metropolitan Life Insurance Company; Haley Fiske, Testimony before 
the Legislative Investigating Committee of New York, 1905 ; H. Fiske, 
"Profits of Industrial Insurance," United States Review, thirtieth anni- 
versary number; H. Fiske, "Industrial Insurance," Charities Review, 
March, 1898; Memorandum submitted on behalf of the Metropolitan Insur- 
ance Company, respecting the proposed insurance bills, New York, 1906; 
W. A. Fricke, Insurance, 1898, pp. 212-77 (article by John R. Hegemann, 
president of Metropolitan Life Insurance Co.). 

149 



150 INDUSTRIAL INSURANCE 

companies distributed annually to their beneficiaries more 
than $20,000,000 in burial benefits. 

The burden of this enormous business is heavy and is 
borne exclusively by members of the wage-earning groups, 
and especially by those whose wages are lowest or next to 
the lowest. This expense has come to be regarded in this 
country as a necessary part of the weekly budget. There 
prevails among the people of our cities, among immigrants 
as well as among native born, a strong feeling against 
"pauper burials," and this sentiment is quickened and stimu- 
lated by the persuasions and representations of the numerous 
agents of the industrial insurance companies; it is their 
stock in trade. According to Hoffman 2 the average policy 
in that company in 1899 was for $114.22. The entire pay- 
ments of premiums into the treasury of this company in 
1899 amounted to the sum of $19,028,792, and the payments 
of benefits to $5,426,545. The entire receipts from the 
beginning to the year 1899 were $120,505,542, and the pay- 
ments of burial benefits $39,901,006. The ratio of cost of 
administration to income was 39.17 per cent., as compared 
with 17.34 per cent, in the ordinary life-insurance com- 
panies. At first sight this contrast is so startling, and the 
difference of cost so great as to raise a suspicion of foul 
play. But further analysis mitigates the severity of judg- 
ment, although it may lead us to dislike the system even 
more than before. (The figures may be found in the Stand- 
ard of September 17, 1898, pp. 3141!., as given by Mr. 
J. R. Hegemann, president of the Metropolitan Life Insur- 
ance Company.) In Statistics, Fraternal Societies, 1905, p. 
213, the editor asserts that in twenty-five of the ordinary 
life-insurance companies the ratio of administrative ex- 
penses to premiums was 18.3 per cent, (varying from 10.4 

2 History of the Prudential Insurance Co., p. 289. 



PRIVATE INSURANCE COMPANIES 151 

to 31.7 per cent.) ; while in twenty-five fraternal societies 
the cost was on the average only 8.4 per cent. 

The explanation of the difference and of the enormous 
burden which falls upon the poor insurers is given by the 
administrators of the industrial companies themselves, at 
least in part. Of the cost for salaries and the amounts 
absorbed by profits of directors and stockholders we must 
learn elsewhere, but of the chief facts they make clear dis- 
closure. One of the factors in explanation is the small size 
of the poor man's policy, as compared with that of the rich 
man. The average policy in ordinary companies is $2,468, 
while that in industrial companies is only $142, and that of 
the weekly payment plan is much lower still. The industrial 
company must write at least eighteen policies to make the 
sum of one policy in ordinary insurance. In connection 
with each of these little policies visits must be made to 
solicit and write the policies; each policy must be carefully 
examined by experts, immense correspondence must be 
carried on from the central office with agents all over the 
land, the payments of premiums demand time and expense, 
the accounts must be kept with each policy holder and each 
agent, and the medical examinations also call for heavy 
payments. It is estimated that the agents of these companies 
must make in the United States annually more than 416,- 
000,000 visits in homes, or about 1,328,000 each week day. 
To these causes of expense we must in fairness add the fact 
that the rate of mortality among working people is much 
higher than among the members of the well-fed, comfort- 
able classes, and this makes the cost of insurance higher. 
The habits of life of many working-people, their unsanitary 
homes, inadequate or improper food, hard and monotonous 
labor often at depressing tasks, close confinement, and occa- 
sionally inherited defects, all have a bearing on death rates 



INDUSTRIAL INSURANCE 



and hence on premiums which must be charged to cover 
risks. The table shows the relative rates of mortality ac- 
cording to Farr's English Life Table, based on the general 
population of Great Britain; the Actuaries' Table, based on 
the combined experience of seventeen English companies; 
and the table based on the experience of 12,000,000 insured 
lives with the Metropolitan Life Insurance Company. 

TABLE I 



Age 


Deaths per 1,000 
(Farr) 


Actuaries 


Metropolitan 


20 


774 






21 


8 46 


*:) 




25 

35 
45 

% 


9.24 
11.24 
14.50 
21-75 

4.1 2O 


06 
7.72 
9.19 

n-95 
20.99 

A At 


14.14 
17-15 

22. 56 

35- 22 


70 . 


60 80 


' 62 cfl 










yu. yy 



The actual premiums paid in the industrial companies 
are set forth in their tables, and typical tables are here 
reproduced. 

Value of industrial insurance. We may freely admit 
that the claim of the companies that they offer real benefits 
to low-paid workmen has considerable foundation in fact, 
and they are entitled to consideration. It is incredible that 
such a vast business should rest upon unmitigated falsehood 
and injustice. The companies are right in their claim that 
no considerable number of workmen of this level will volun- 
tarily insure, even if rates are low, and that solicitation by 
agents is costly and the expense must be charged in the 
premiums. They are right in claiming that the benefits have 
often spared the poor family the shame of a pauper funeral ; 
that family feeling and affection are fostered; that a spirit 
of independence and seif-respect is maintained; and these 



PRIVATE INSURANCE COMPANIES 



153 



TABLE II 

INDUSTRIAL INSURANCE OF THE INSURANCE COMPANIES 
Industrial Life Insurance, Its History, Statistics, and Plans [1905], pp. 59 ff.) 
BALTIMORE LIFE, BALTIMORE, MD. 







POLICIES IN FORCE 






YE 


NEW POLICIES 
IN THIS YEAB 




PREMIUMS 
RECEIVED 


PAYMENTS 










Number 


Amount 






1904 


$4,548,840 


I03,9 6 5 


$7,977,954 


$592,777 


$108,545 


1903 


4,969iiS2 


105,587 


7,770,477 


596,472 


96,731 


1902 


57 a 3"8 


100,292 


7,133,760 


565,871 


71,345 


1901 


5,774,038 


100,714 


6,5 2 9,9 I 3 


544,309 


68,429 


1900 


5,354,140 


92,310 


5,642,853 


5 2 3,785 


54,921 


1899 


4,486,212 


86,061 


5,038,963 


467,880 


47,599 


1898 


4,45 I >355 


76,974 


4,251,905 


421,496 


39,879 



COLONIAL, JERSEY CITY, N. J. 



1904 


$8,784,984 


83,690 


$9,781,317 


$454,807 


$H5,554 


1903 


7,122,800 


70,076 


8,028,103 


364,588 


86,855 


1902 


6,454,644 


55,597 


6,149,410 


282,093 


69,871 


1901 


5,211,301 


43,5 2 o 


4,668,763 


203,454 


50,676 


1900 


4,209,047 


34,674 


3,650,629 


152,501 


39,5 01 


1899 


4,042,526 


27,697 


2,854,075 


85,252 


15,900 


1898 


2,719,798 


10,623 


1,423,482 


23,626 


4,221 



COLUMBIAN NATIONAL, BOSTON 



1904 
1903 

1902 


$9,468,216 
4,813,941 
759,640 


40,397 
18,756 
4,275 


$5,532,978 
2,630,959 
6l5,3l6 








CONTENTNEA LlFE, WlLSON, N. C. 


1903 


$43,980 


798 


$22,360 


$1,283 


$5 



EQUITABLE INDUSTRIAL, WASHINGTON, D. C. 



1904 


$1,690,736 


25,522 


$2,960,212 


$107,358 


$34,599 


1903 


1,665,414 


23,304 


2,692,699 


95,425 


24,401 


1902 


!,334,9 2 3 


20,401 


2,325,483 


58,252 


^ 16,458 



HOME, WILMINGTON, DEL. 



1903 


$ 284,400 


12,948 


$1,691,809 


$49,043 


$14,954 


1902 


1,104,223 


12,842 


1,448,963 


48,487 


15,867 


1901 


1,417,440 


12,132 


1,450,393 


27,770 


8,633 


1900 


^551,079 


5,146 


920,980 


18,523 


6,063 



154 



INDUSTRIAL INSURANCE 



TABLE II Continued 
IMMEDIATE BENEFIT, BALTIMORE, MD. 







POLICIES IN FORCE 






YEAR 


NEW POLICIES 
IN THIS YEAR 




PREMIUMS 
RECEIVED 


PAYMENTS 










Number 


Amount 






1904 


$1,233,420 


15,002 


$1,210,675 


$71,432 


$18,086 


1903 


391,268 


10,703 


705,128 


58,857 


16,245 


1902 


421,318 


7,587 


509,131 


54,996 


J 4,253 


1901 


44i,39 


7,201 


406,849 


44,760 


i4,3 J 4 


1900 


139,535 


$,*3* 


228,512 


43,763 


14,004 


1899 


1,102,618 


4,481 


195,802 


43,693 


11,241 


1898 


1,488,774 


13,651 


1,006,704 


62,483 


19,991 


1897 


I>520,337 


11,843 


845,954 


38,282 


II > 73 



JOHN HANCOCK, BOSTON, MASS. 



1904 


$61,840,600 


1,474,399 


$233,069,767 


$13,622,350 


$3,97 I ,33 


1903 


57,444,640 


1,395,779 


216,375,960 


12,389,529 


3,642,681 


1902 


68,137,409 


1,312,630 


200,294,696 


10,914,984 


2,964,953 


1901 


57,928,751 


1,223,500 


177,597,439 


9,595,3 01 


2,819,624 


1900 


52,060,760 


i,i52,444 


159,893,856 


8,252,341 


2,554,905 


1899 


44,358,633 


1,069,197 


141,609,904 


7,209,290 


2,193,573 


1898 


37,936,626 


956,382 


124,923,200 


6,512,804 


1,874,015 


1897 


35,959,176 


899,418 


115,750,709 


5,773,*44 


1,684,027 


1896 


36,871,080 


835,35! 


105,640,047 


5,217,207 


1,643,708 


1895 


41,905,652 


771,972 


95,640,574 


4,638,040 


1,428,921 


1894 


33,146,067 


681,802 


82,876,338 


3,862,056 


1,213,607 


1893 


34,57 J ,979 


607,150 


73,043,678 


3,444,3*3 


1,116,124 


1892 


29,326,680 


556,435 


65,428,121 


2,914,498 


1,005,507 


1891 


25,374,745 


476,612 


54,516,514 


2,387,7! 


932,488 


1890 


23,083,151 


402,147 


45,772,709 


2,002,644 


811,688 


1889 


18,239,650 


320,264 


36,365,419 


1,616,585 


596,5 


1888 


15,953,123 


256,574 


29,943,052 


i,3 J 7,374 


473,843 


1887 


13,334,392 


203,467 


23,802,502 


1,031,845 


357,002 


1886 


10,748,152 


148,850 


17,805,910 


8i5,75o 


3 6,938 


1885 


7,055,933 , 


107,872 


12,600,935 


647,143 


221,266 


1884 


4,752,613 


80,629 


8,940,275 


547,058 


206,460 


1883 . 


4,085,489 


63,625 


6,730,902 


472,242 


175,438 


1882 


3,718,902 


48,568 


5,096,488 


415,537 


194,053 


1881 


2,931,860 


36,012 


3,787,230 


346,887 


161,606 


1880 


5,483,431 


30,702 


3,139,018 


336,198 


172,570 


1879 


1,275,918 


9,3 2 7 


951,000 


294,043 


162,141 



LIFE INSURANCE COMPANY OF VIRGINIA, RICHMOND, VA. 



1904 


$11,788,596 


358,541 


$37,7 IO ,9i 


$1,680,411 


$512,105 


1903 


11,906,867 


331,452 


34,503,483 


1,509,463 


434,204 


1902 


12,437,338 


302,839 


30,303,815 


1,338,518 


39 2 ,997 



PRIVATE INSURANCE COMPANIES 



TABLE II Continued 
LIFE INSURANCE COMPANY OF VIRGINIA, RICHMOND, VA. Continued 



YEAR 


NEW POLICIES 
IN THIS YEAR 


POLICIES IN FORCE 


PREMIUMS 
RECEIVED 


PAYMENTS 


Number 


Amount 


1901 


$10,785,037 


266,685 


$26,906,073 


$1,151,213 


$373,419 


1900 


9,102,616 


237,283 


23,239,844 


1,087,272 


37 ,429 


1899 


8,968,321 


219,679 


20,246,656 


937,9 01 


308,259 


1898 


12,318,555 


194,95! 


18,373,119 


852,028 


252,025 


1897 


9,212,261 


165,660 


15,264,250 


752,215 


214,273 


1896 


10,613,052 


149,672 


13,778,199 


712,932 


222,987 


I89S 


9,256,579 


116,814 


n,o53,o39 


59i,38i 


162,663 


1894 


8,140,705 


99,618 


9,647,707 


55^794 


160,003 


1893 


6,998,569 


75,!3o 


6,643,061 


546,151 


154,529 


1892 


6,272,217 


69,527 


6,230,224 


475,520 


120,496 


1891 


4,940,820 


5M9* 


4,520,424 


395,i9i 


102,742 


1890 


3,000,115 


3 2 ,9 2 7 


3,589,7 20 


234,547 


88,795 


1889 


3,3*4,876 


21,271 


2,536,280 


i5 I 57* 


61,697 


1888 


2,619,276 


*5,!93 


!,76,377 


127,049 


39,29i 


1887 


1,250,000 


10,500 


850,000 


99,556 


60,589 



METROPOLITAN, NEW YORK, N. Y. 



1904 


$305,258,155 


7,614,729 


$1,127,889,229 


$50,808,924 


$14,826,976 


1903 


297,968,863 


7^87,345 


1,059,875,827 


45,656,961 


12,907,617 


1902 


3 1 2,990,338 


6,698,291 


981,676,306 


39,653,725 


11,320,967 


1901 


296,606,312 


6,008,662 


881,491,451 


34,705,186 


10,704,747 


1900 


264,737,682 


5,327,067 


768,977,676 


31,210,356 


9,785,624 


1899 


253,396,620 


4,855,756 


688,629,175 


26,591,651 


8,575,134 


1898 


210,508,694 


4,3*7,274 


591,427,272 


23,372,770 


7,691,943 


1897 


232,264,188 


4,028,722 


534,343,756 


21,402,966 


6,990,866 


1896 


169,820,543 


3,643,569 


454,068,004 


19,306,196 


6,963,256 


1895 


175,905,407 


3,458,846 


416,062,194 


18,336,918 


6,580,390 


1894 


294,270,451 


3,559,i65 


423,514,171 


16,827,016 


5,747,823 


1893 


150,057,703 


2,932,064 


343,917,746 


14,361,214 


5>535, I2 o 


1892 


127,222,470 


2,7i5,4i4 


305,451,576 


12,511,078 


4,898,382 


1891 


94,927,488 


2,278,487 


254,939,881 


10,830,373 


4,408,379 


1890 


100,852,802 


2,096,595 


231,115,440 


9,390,927 


3,746,478 


1889 


92,726,883 


1,849,113 


200,829,929 


8,342,945 


3,042,818 


1888 


91,242,946 


1,632,642 


176,533,142 


6,810,110 


2,55, I0 5 


1887 


84,059,118 


i,345,!25 


147,758,287 


5,618,767 


2,098,936 


1886 


72,783,721 


1,066,875 


119,560,339 


4,438,096 


1,566,514 


1885 


57,819,912 


829,833 


91,234,252 


3,414,524 


1,279,645 


1884 


59,505,421 


670,999 


7^965,635 


2,811,816 


970,590 


1883 


52,505,697 


526,042 


56,536,325 


1,975,703 


631,639 


1882 


36,822,169 


335,789 


34,679,307 


1,246,515 


369,314 


1881 


24,469,300 


190,348 


17,894,620 


859,057 


268,811 


1880 


20,728,700 


110,193 


9,103,870 


568,204 


200,805 


1879 


523,539 


5,143 


516,618 


432,560 


144,421 



156 



INDUSTRIAL INSURANCE 



TABLE II Continued 
MUTUAL OF BALTIMORE, BALTIMORE, MD. 



YEAR 


NEW POLICIES 
IN THIS YEAR 


POLICIES IN FORCE 


PREMIUMS 
RECEIVED 


PAYMENTS 


Number 


Amount 


1904 


$2,016,918 


35,73 


$ 3,559,495 


$207,443 


$84,075 


1903 


,815,548 


32,162 


3,095,453 


188,158 


74,508 


1902 


,684,671 


28,093 


2,641,356 


165,322 


57, I][ 9 


1901 


,322,112 


23,981 


2,206,081 


147,363 


59,097 


1900 


,217,455 


20,855 


1,872,030 


128,201 


43,822 


1899 


3,57 2 


17,574 


1,526,787 


124,502 


52,243 


1898 


,454,344 


19,015 


1,479,364 


119,286 


44,355 


1897 


,148,486 


14,746 


1,049,638 


101,676 


43,4io 


1896 


55, OI 3 


8,i55 


621,108 


93,47 J 


32,192 


1895 


495,226 


5,999 


54i,3 8 


85,493 


34,423 


1894 


387,993 


4,340 


446,501 


73,225 


3i,792 


1893 


602,196 


2,028 


243,010 


68,565 


25,643 


1892 


440,989 


2,856 


39^856 


62,691 


21,493 



PROVIDENCE LIFE, PROVIDENCE, R. I. 



1904 


$108,450 


2,OI2 


$301,600 


$ 5,!73 


$3,225 


1903 


586,320 


5,509 


761,185 


11,610 


2,163 


1902 


548,840 


4,818 


654,378 


8,107 


1,824 


1901 


514,3*9 


3,683 


517,168 


6,864 


2,164 


1900 


301,270 


i,9i3 


3io,7n 


3,604 


1,215 


1899 


524,886 


663 


224,886 


1,406 


308 



PRUDENTIAL, NEWARK, N. J. 



1904 


$202,524,911 


5,642,335 


$675,992,239 


$41,155,697 


$11,258,506 


1903 


190,386,294 


5,176,456 


6i3,935,9 10 


36,028,402 


9,812,458 


1902 


184,327,303 


4,692,182 


550,464,265 


31,138,718 


8,096,719 


1901 


191,712,877 


4,290,539 


498,127,133 


26,681,757 


7,411,428 


1900 


182,270,423 


5,908,622 


448,596,996 


22,559,354 


6,207,418 


1899 


165,760,248 


3,406,189 


389,039,257 


19,028,792 


5,420,758 


1898 


121,080,784 


2,924,526 


333,992,200 


16,139,452 


4,749,885 


1897 


112,371,379 


2,658,700 


303,770,952 


14,551,868 


4,342,562 


1896 


108,223,712 


2,437,251 


279,030,638 


13,329,644 


4,158,831 


1895 


124,374,407 


2,330,741 


268,414,100 


11,892,766 


3,846,754 


1894 


205,128,243 


2,256,014 


259,840,927 


10,890,302 


3,!9i,i75 


1893 


128,208,941 


1,941,533 


218,199,566 


9,084,844 


2,893,708 


1892 


92,677,524 


1,653,465 


184,306,206 


7,525,844 


2,518,567 


1891 


72,966,176 


1,360,383 


150,758,907 


6,413,283 


2,079,669 


1890 


95,674,484 


1,228,332 


135,084,498 


5,636,876 


1,749,714 


1889 


73,576,853 


1,099,3! 2 


H7,357,4i5 


4,442,833 


1,327,856 


1888 


58,214,981 


850,064 


92,418,854 


3,659,495 


1,096,234 


1887 


60,202,194 


736,909 


81,694,088 


2,942,257 


853,819 



PRIVATE INSURANCE COMPANIES 



157 



TABLE II Continued 
PRUDENTIAL, NEWARK, N. J. Continued 







POLICIES IN FORCE 






YEAR 


NEW POLICIES 
IN THIS YEAR 




PREMIUMS 
RECEIVED 


PAYMENTS 










Number 


Amount 






1886 


$49,142,316 


548,433 


$59,328,627 


$2,114,296 


$593,273 


1885 


28,860,882 


422,671 


40,266,445 


1,468,955 


418,622 


1884 


24,892,268 


3 2 4,794 


28,545,189 


1,127,738 


322,382 


1883 


20,426,140 


273,917 


2 3,53,935 


828,911 


222,083 


1882 


11,541,210 


196,007 


15,738,973 


571,595 


157,705 


1881 


9,688,362 


133,582 


10,959,948 


402,947 


111,508 


1880 


8,555,904 


87,462 


7,347,892 


250,958 


57,256 


1879 


3,!57,35 2 


43,715 


3,866,913 


121,560 


23,013 


1878 


1,785,696 


22,8o8 


2,027,888 


59,817 


",338 


1877 


967,932 


11,226 


I,03 , 6 55 


28,517 


5, 2 96 


1876 


727,168 


4,816 


443,07 2 


14,495 


1,958 



WESTERN AND SOUTHERN, CINCINNATI, O. 



1904 


$14,830,110 


227,624 


$24,600,187 


$1,249,945 


$354,666 


1903 


14,161,533 


209,623 


22,223,035 


1,113,699 


295,369 


1902 


12,948,340 


184,686 


19,643,480 


917,337 


221,284 


1901 


10,878,524 


155,096 


16,426,534 


722,605 


203,896 


1900 


10,070,944 


131,132 


13,618,878 


614,301 


150,642 


1899 


8,370,729 


"7,545 


10,881,961 


508,900 


122,494 


1898 


7,256,666 


9^589 


8,392,902 


397,687 


96,448 


1897 


4,980,043 


7!,30i 


6,619,653 


320,996 


79,169 


1896 


4,290,332 


62,747 


5,724,7 2 8 


298,686 


79,060 


1895 


4,573,492 


56,960 


5,294,38i 


246,807 


69,087 


1894 


6,178,914 


46,362 


4,374,675 


227,392 


52,456 


1893 


3,830,862 


41,296 


3,691,843 


183,415 


44,336 


1892 


2,522,842 


30,47 2 


2,707,366 


140,564 


39,539 


1891 


2,661,930 


24,638 


2,329,936 


* OI ,397 


26,944 


1890 


2,620,328 


16,926 


2,000,073 


70,327 


!9, 2 33 


1889 


2,505,945 


n,348 


1,537,43 


43,5*8 


10,837 


1888 


1,698,748 


6,237 


889,073 


14,359 


1,107 



are not insignificant advantages, although we may think they 
cost too dear and may be better gained in other ways. 

Pauper burials, although not an accurate measure of the distress 
of the period, reached an average rate of 20 per 10,000 of population. 
During 1881 to 1885 the rate for 18 cities was 18.5 against an average 
of 12.9 during the five years 1897 to ipoi. 8 



3 J. F. Dryden, A Quarter Century of Industrial Insurance in the 
United States, p. 8. 



158 



INDUSTRIAL INSURANCE 



GENERAL SUMMARY 





J 




POLICIES IN FORCE 






YEAR 


0* 


NEW POLICIES 
IN THIS YEAR 






PREMIUMS 
RECEIVED 


PAYMENTS 




d * 





Number 


Amount 






1904 


14 


$624,422,316 


I5,637,69 2 


$2,132,300,723 


$110,006,643 


$31,302,626 


1903 


15 


596,510,565 


14,600,502 


,977,!85,534 


98,063,490 


27,408,191 


1902 


1C 


610,968,819 


13,444,753 


,806,454,742 


85,146,410 


23,243,657 


1901 


15 


598,593,825 


12,333,459 


,640,398,546 


74,660,060 


22,003,402 


1900 


18 


566,037,936 


11,215,53! 


,468,474,534 


65,962,426 


19,607,808 


1899 


17 


519,796,085 


10,048,808 


,292,812,402 


56,159,889 


17,023,485 


1898 


14 


422,164,810 


8,794,178 


,109,526,870 


48,776,246 


14,971,238 


1897 


12 


4~i5,338,6i4 


8,000,636 


995,545,736 


43,619,310 


13,526,315 


1896 


II 


360,852,458 


7,375,688 


886,484,869 


40,058,701 


13,420,336 


1895 


II 


380,832,362 


6,943,769 


819,521,573 


37,008,536 


12,398,782 


1894 


12 


573,279,943 


6,847,892 


802,016,133 


32,253,881 


10,635,602 


1893 


II 


344,361,223 


5,748,195 


661,568,502 


28,311,386 


9,955,865 


1892 


IO 


276,893,923 


5,118,897 


582,710,309 


24,352,900 


8,841,322 


1891 


9 


218,138,800 


4,302,427 


481,060,716 


20,654,980 


7,725,328 


1890 


9 


242,250,959 


3,875, 102 


428,037,245 


17,647,036 


6,423,341 


1889 


8 


201,787,017 


3,352,708 


364,483,382 


14,760,691 


5,086,233 


1888 


7 


161,260,335 


2,788,000 


302,033,066 


11,939,540 


4,162,745 


1887 


4 


158,845,704 


2,296,001 


254,104,877 


9,692,425 


3,370,346 


1886 


3 


132,674,189 


1,764,158 


196,694,876 


7,368,142 


2,466,725 


1885 


3 


93,736,727 


1,360,376 


144,101,632 


5,530,622 




1884 


3 


89,150,302 


1,076,422 


108,451,099 


4,486,612 


i^499'432 


1883 


3 


77,017,326 


863,584 


86,321,162 


3,276,856 


1,029,160 


1882 


3 


52,082,281 


580,364 


55,514,768 


2,233,647 


721,072 


1881 


3 


37,089,522 


359,942 


32,641,798 


1,608,891 


541,925 


1880 


3 


34,768,035 


228,357 


19,590,780 


1,155,360 


430,631 


1879 


3 


4,956,809 


58,185 


5,334,531 


548,163 


329,575 


1878 


i 


1,785,696 


22,808 


2,027,888 


59,817 




1877 


i 


967,932 


11,226 


1,030,655 


28,517 


5,296 


1876 


i 


727,168 


4,816 


443,072 


14,495 


J ,958 


Total 




$7,797,291,727 






$845,385,672 


$260,069,267 



Hoffman 4 presents a study of pauper burials in ten cities 
(New York, Boston, Newark, Cincinnati, Baltimore, Indian- 
apolis, Minneapolis, Cambridge, Worcester, and Charlotte), 
and finds that the rate of pauper burials in 100,000 popula- 
tion was, in 1880 to 1884, 210, and fell in 1895 to ^99 to 
156, after the industrial companies had had time to estab- 
lish the custom of burial insurance on a general scale. 
It is impossible to discover all the causes of this decrease, 



History of the Prudential Insurance Co., p. 308. 



PRIVATE INSURANCE COMPANIES 



but we may admit a large influence from burial insurance. 
They have unintentionally rendered another service to the 
cause of a rational system of insurance which the future 
will develop; they have shown that voluntary systems are 

TABLE III 

FOR A PAYMENT OF 5 CENTS PER WEEK THE BURIAL BENEFIT PROMISED Is: 



S'S 




e 


*o 




e 


^ 




e 


** 




e 


1 Age at Beginni 
of Payment 
Premiums 


Prudential Co. 


Western and 
Southe 


Age at Beginni 
of Payment 
Premiums 


Prudential Co. 


Western and 
Southe 


Age at Beginni 
of Payment 
Premiums 


Prudential Co. 


Western and 
Southe 


Age at Beginni 
of Payment 
Premiums 


Prudential Co. 


Western and 
Southe 


10 


$120 


$120 


26 


$74 


$75 


41 .. . 


$49 


$48 


56 


$27 


$26 


ii 


118 




27. . . 


72 


72 


42. . . 


47 


46 


57---- 


26 


25 


12. . 


116 


no 


28. .. 






43--- 


45 


44 


58.... 


25 


24 


13- 


112 


106 


29. 


69 


69 


44- 


44 


42 


59- 


23 


22 


14- 
15. 


108 

103 


103 

IOO 


3- 


67 
66 


6? 
65 


2: : 


42 


41 
40 


60.. . 
61.. 


22 
21 


21 
20 


16. 


IOO 


98 


32. 


64 


63 


47. . 


39 


39 


62.. . 


20 


19 


17. 


94 


95 


33- 


62 


61 


48. . 


38 


37 


63.- 


19 


18 


18. 


92 


92 


34- 


60 


59 


49. . 


37 


35 


64.- - 


18 


17 


19. 

20. 


89 
87 




35- 
36. - 


59 

57 


1 


50. . 
51- 


35 
34 


34 
33 


65.- - 
66.. . 


17 
16 


16 
15 


21. 


84 


85 


37- 


55 


54 


52- 


32 


32 


67.- 


16 


14 


22.. .. 


82 


83 


38. - 


54 


53 


53- 


3 1 


31 


68.. . 


15 


13 


23.. .. 


80 


81 


39- 


52 


51 


54. 


30 


30 


69.- 


14 


12 


24. . . . 


78 


79 


40.. . 


So 


49 


55--- 


28 


28 


70.. . 


13 


II 


25.. .. 


76 


77 





















TABLE IV 

BURIAL MONEY AT DEATH OF CHILD, PAYABLE IF POLICY HAS BEEN IN FORCE 
THE TIME STATED* 



Age 


Under 
3 Mos. 


Under 
6 Mos. 


Under 
9 Mos. 


Under 
lYear 


i 
Year 


Years 


Years 


Years 


Ylars 


6 
Years 


Y^ars 


8 
Years 


2. .. 

3- 
4. . 
5- 
6. . 

I' ' 


$ 8 
9 
10 
ii 

12 

14 

16 


$10 

ii 
13 
14 
16 
19 


$12 

14 
16 
18 

22 
26 


$15 
17 

20 
24 
29 

35 


$17 

20 
24 
29 

39 
g 


$20 
24 
29 

& 

8s 


$24 

29 

47 
65 
90 

120 


$29 
Si 
70 
95 
1 20 


$55 
75 

IOO 

I2O 


$80 

IOO 
120 


$100 

120 


$120 


9. . 


20 


28 


50 


75 


120 

















* John Hancock Life Insurance Co. of Virginia, and the Prudential. 

costly and inadequate and that in all probability obligatory 
measures alone will bring such benefits within the power of 
low-paid workmen. But while we may try to be just to the 
companies, and may admit that they have responded to a 
universal demand of wage-earners, we have still to inquire 



i6o 



INDUSTRIAL INSURANCE 



TABLE V 

PREMIUMS AND PAYMENTS OF THE "PRUDENTIAL COMPANY OF AMERICA 
POLICY OF ADULTS, ENTAILING A WEEKLY PREMIUM OF: 



Age 


ci 

$120 

118 
116 

112 

108 

103 

100 

94 
92 
89 
8? 
84 
82 
80 
78 
76 
74 

72 

7i 
69 
67 

66 
64 
62 
60 
59 
57 
55 
54 
52 
50 
49 
47 
45 
44 
42 
4i 
39 
38 
37 
35 
34 
32 
3i 
30 
28 
27 
26 
25 
23 

22 
21 
20 
19 

18 
17 
16 
16 
15 
14 
13 


10 

Cts. 


a 


20 
Cts. 


a. 


30 

Cts. 


5 

Cts. 


40 

Cts. 


c 4 ?, 


50 
Cts- 


a. 


60 

Cts. 


65 
Cts. 









$240 
236 
232 
224 
216 
206 
200 
188 
184 
178 
174 
168 
164 
160 
156 
152 
148 
144 
142 
138 
J 34 
132 
128 
124 

120 

118 
114 
no 
108 
104 

100 

98 

94 
90 
88 
84 
82 
78 
76 
74 
70 
68 
64 
62 
60 
56 
54 
52 
50 
46 
44 
42 
40 
38 
36 
34 
32 
32 
30 
28 
26 




















_ 




1 

1 

J 




12 


$348 
336 
324 
309 
30 
282 
2 7 6 
267 
261 
252 
2 4 6 
240 
234 
228 

222 

216 

213 

207 
201 
I 9 8 
192 

186 
1 80 
177 
171 
165 
162 
156 
150 
147 
141 
135 
132 
126 
123 
117 
114 
in 
105 

102 
96 

93 
90 
84 
81 
78 
75 
69 
66 
63 
60 
57 
54 

8 

48 
45 
42 
39 


$448 
432 
412 
400 
376 
368 
356 
348 
336 
328 
320 
312 
304 
296 
288 
284 
276 
268 
264 
256 
248 
240 
236 
228 

220 

216 

208 
200 

180 

176 

168 
164 
156 
152 
148 
140 
136 
128 
124 

120 
112 
108 
104 
IOO 

92 

88 
84 
80 
76 
72 
68 
64 
64 
60 
56 
52 


$515 
500 
470 
460 

445 
435 
420 
410 
400 
390 
380 
370 
360 
355 
345 
335 
330 
320 
310 
300 
295 
285 
275 
270 
260 
250 
245 
235 
225 
220 

210 
20 5 
195 
190 
185 
175 
170 

160 
155 
150 
140 
i35 
130 
125 
"5 
no 
105 
100 
95 
90 

u 

80 

75 
70 
65 

















H 


%6 4 
552 
534 
522 
504 
492 
480 
468 
456 
444 
432 
426 
414 
402 
396 
384 
372 
360 
354 
342 
330 
324 
3" 
300 
294 
282 
270 
264 
252 
246 
234 
228 

222 
210 
204 
192 

1 86 
1 80 
168 
162 
156 
150 
138 
132 
126 

120 
114 

108 

102 
96 
96 
90 

8 4 
78 


$623 
609 
588 
574 
560 
546 
532 
5i8 
504 
497 
483 
469 
462 
448 
434 
420 
413 
399 
385 
378 
364 
35 
343 
329 
315 
308 
294 
287 
273 
266 
259 
245 
238 
224 
217 

210 
182 

175 
161 

!54 
147 
140 
133 
126 
119 

112 
112 
105 
98 
91 


$672 
656 
640 
624 
608 
592 
576 
568 
552 
536 
528 
512 
496 
480 
472 
456 
440 
432 
416 
400 
392 
376 
360 
352 
336 
328 
312 
304 
296 
280 
272 
256 
248 
240 
224 
216 
208 

200 
l8 4 
176 

168 
160 
152 
144 












$ S 88 

574 
546 
532 
5io 
490 




18 


19 


$720 

702 
684 

666 
648 
639 
621 
603 
594 
576 
558 
540 
53i 
513 
495 
486 
468 
450 
441 
423 
405 
396 
378 
369 
35i 
342 
333 
315 
306 
288 
279 
270 
252 
243 
234 
225 
207 
198 
189 
180 
171 
162 


8760 
740 
720 
710 
690 
670 
660 
640 
620 
600 
590 
570 
550 
540 
520 
500 
490 
47o 
450 
440 
420 
410 
390 
380 
370 
350 
340 
320 
310 
300 
280 
270 
260 
250 
230 

220 


$8i 4 
792 
78i 
759 
737 
726 
704 
682 
660 
649 
627 
605 
594 
57* 
550 
539 
517 
495 
484 
462 
451 
429 
418 
407 
385 
374 
352 
341 
330 
308 
297 
286 
275 
253 
242 


$852 
828 
804 
792 
768 
744 

720 

708 
684 
660 
648 
624 
600 
588 
564 
540 
528 
504 
492 
468 
456 
444 
420 
408 
384 
372 
360 
336 


$611 
58s 
572 
546 
533 
507 
494 
481 
455 
442 
416 
403 
390 
364 










11 ;;;:; 




11 ;::;: 










33 




8 




11" 


39 


41 








46'" 




48 " 






5i 
52 
S3 


55 
e6 




11'" 




60 

61 
62 


6^ 


64 












65 
66 

a 


See footnote (*) 


60 







* One-fourth of the death benefit in the first six months; one-half of death benefit in the 
second six months; full benefit after one year of insurance. 



PRIVATE INSURANCE COMPANIES 



161 



whether the good has not been purchased at too great a 
price, and whether a more economical system is not possible. 
The premiums are relatively high and the benefits extremely 

TABLE VI 

INFANTILE TABLE ENTAILING A WEEKLY PREMIUM OF 5 CENTS* 



PAYMENTS AFTER FOLLOWING 
PERIOD 


AGE AT TAKING OUT POLICY 


2 


3 


4 


5 


6 


7 


8 


9 


Under 3 Months 


$ 8 
10 

12 

15 
J 7 
20 
24 
2 9 

55 
80 

100 

1 20 


$ 9 
ii 

14 
17 

20 
24 
2 9 
51 

75 

100 
120 


$ 10 
13 

16 

20 
24 
2 9 

47 
70 

100 
120 


$ II 
14 

18 
24 
29 
43 
65 
95 
1 20 


$ 12 

16 

22 
2 9 

39 
60 
90 
1 20 


$ 14 
19 
26 

35 
55 
85 
1 20 


$ 16 

22 

35 

i: 

1 20 


$ 2O 
28 
50 

75 

I2O 


36 Months 


6-9 " 


Q-I2 " 


i Year 


2 Years 







t 


i 








8 













* A weekly premium over 10 cents is not collected. 

TABLE VII 
PREMIUM FOR ADULTS ON A POLICY CARRYING A $500 DEATH BENEFIT* 



Age 


Weekly 
Premium 


Age 


Weekly 
Premium 


Age 


Weekly 
Premium 




Cents 




Cents 




Cents 


15 Years 


24 


27 Years 


35 


39 Years 


48 


16 


25 


28 


35 


40 


5 


17 


27 


29 


36 


4i 


51 


18 


27 


3 


37 


42 


53 


i9 


28 


3i 


38 


43 


56 


20 


29 


3 2 


39 


44 


57 


21 


3 


33 


40 


45 


60 


22 


3 


34 


42 


46 


61 


23 


3 1 


35 


42 


47 


64 


24 


32 


36 


44 


48 


66 


25 


33 


37 


45 


49 


68 


26 


34 


38 


46 


5 


7 1 



* During the first six months $125; $250 during the second six months, and full benefit 
($500) after one year of insurance. 

low. The poorer wage-earners must content themselves 
with extremely small returns for their enormous sacrifice. 
Numerous workers in charitable societies complain that after 



162 INDUSTRIAL INSURANCE 

the burial fees are paid there is nothing left for savings ; that 
while thrift may be cultivated in one direction the benefits 
paid at death in a lump sum lead almost universally and 
inevitably to extravagant funerals and display, so that the 
insurance company, their agents, and the undertakers profit 
by the losses of those who can least afford such expenditures. 
President Hegemann has stated that in 86 per cent, of cases 
investigated the expenses of sickness and burial exceeded 
the benefits paid, and that the average sum paid on infantile 
policies in the year 1897 was only $25.83. 

A very material consideration in this connection is that 
while the burial-benefit companies absorb the greater part 
of the available resources for insurance purposes in families 
of small income, they by no means cover all the insurance 
needs of such families and, perhaps, not the most pressing. 
The attempt was made in the earlier history of these com- 
panies to provide sickness insurance, but the effort failed 
and had to be abandoned. President Dryden, in his account 
of this movement, says that a company which has its busi- 
ness scattered over a wide territory, and must act through 
salaried agents, cannot undertake sickness insurance, and 
that this form of insurance is possible only in brotherhoods 
or small groups where the members know each other and 
can detect and discipline malingerers. 5 In the same way it 
can be shown that this form of organization cannot conduct 
accident insurance, without radical changes of method ; and, 
indeed, it would be grossly unjust, as we have elsewhere 
shown, to lay this burden on the poorly paid employees. 
We must conclude, therefore, that these companies are 
restricted to a very limited field of industrial insurance, that 
they render a necessary service at enormous and burden- 
some cost, and that this cost is so heavy as to hinder both 
savings and insurance of a desirable kind. 

6 Inception and Early Problems of Industrial Insurance, pp. 16, 23. 



PRIVATE INSURANCE COMPANIES 163 

A recent and valuable study of the operation of certain 
companies not named has been published in Bulletin 67 of 
the Bureau of Labor, November, 1906, by Mr. S. E. For- 
man. In this intensive study of a particular city we see the 
working and effect of the system at large, although here 
some of the worst features appear in aggravated form. 
Washington, as the capital city, has few manufactures and 
relatively a large number of personal servants and persons 
employed in ministering to personal convenience of visitors 
and residents. The ratio of poorly paid negroes living on 
fluctuating income, with high rate of sickness and mortality, 
is very large, and their housing conditions are generally 
bad. Among these the industrial insurance companies which 
raise funds by levying assessments are popular. The assess- 
ment companies are not akin to the fraternal societies else- 
where discussed, but are companies for profit of the 
directors and stockholders. They are distinguished also 
from the industrial-insurance companies considered already 
in the fact that they carry on sickness and accident insurance 
with burial benefits added. They are not legally required 
to carry a reserve fund; they collect the premiums by the 
costly method of weekly visits, or sometimes by monthly 
visits ; and the contract permits them to levy assessments to 
meet deficits, although in fact competition with other com- 
panies prevents them from exercising this right under 
ordinary circumstances; if the weekly premium is five cents 
then the yearly premium will be about $2.60. The policy 
promises sickness, accident, and death benefits, although the 
forms of contracts are varied. Twelve of these companies, 
on December 31, 1903, had in force 28,921 policies of this 
type. Forman has shown that those insured in these com- 
panies must pay very dearly for their insurance at least 
75 per cent, more than those insured in the regular com- 
panies, and also more than those insured in the ordinary 



164 INDUSTRIAL INSURANCE 

industrial insurance companies which offer accident and 
sickness benefits. If we compare the insured in the assess- 
ment companies with those insured in the regular companies 
we find the rate of loss in excessive premiums. We may cite 
the conclusions : 

The price of regular industrial insurance in all of its forms has 
been seen to be very much higher than that of ordinary insurance. 
An analysis of the insurance business of the District of Columbia for 
1903 furnishes some measure of the losses to the policy-holders result- 
ing from the purchase of life insurance on the weekly payment or 
industrial plan when compared with the cost of ordinary insurance. 
The rate of premiums charged differs according to the form of the 
policy, but an examination of the several tables which have been 
given would seem to justify the statement that on the average the 
charge for regular industrial insurance is at least 75 per cent, higher 
than that for ordinary insurance. If the amounts collected for 
premiums for the regular industrial policy-holders ($864,059.61) could 
have been paid in annual payments and could have purchased insur- 
ance at the rates charged by the ordinary companies, $40,250,227 would 
have been secured by the industrial policy-holders instead of $23,000,- 
130, the amount actually secured under the industrial plan. This 
represents an apparent loss in insurance protection to the industrial 
policy-holders of $17,250,000, or, if it be measured in premium pay- 
ments, an apparent loss of over $370,000 upon premium payments of 
the year. 

If now we turn to the combination schemes offered by 
the assessment companies we find that similar policies of 
ordinary companies furnish 300 per cent, more insurance 
for the same money. Placing the ascertained facts together 
for the poorest people of Washington, we may accept this 
estimate of loss: 

Losses measured by amount of insurance carried 

a) Regular industrial insurance $17,250,000 

b) Assessment industrial insurance 3,375,ooo 



Total $20,625,000 

Or, if the losses be measured in premium payments made during the 



PRIVATE INSURANCE COMPANIES 165 

year in excess of what would have been required to purchase the same 
amount of insurance if the premiums could have been paid in yearly 
payments in ordinary companies, they may be expressed as follows : 

Losses measured by excessive premiums 

o) Regular industrial insurance $370,000 

b) Assessment industrial insurance 120,000 



Total $490,000 

Of course the facts set forth above tell nothing about the reason- 
ableness or unreasonableness of the cost of either ordinary insurance 
or of industrial insurance. They simply show what the cost of indus- 
trial insurance is and how much greater that cost is than the cost 
of ordinary insurance, and illustrate, as did the study of conditions of 
living among the poor, that the smaller the earning power of a wage- 
earner, the smaller also is the purchasing power of each of his dollars. 

The facts already recited have long been familiar to 
students and to visitors among the poor of our cities, and 
many schemes for mitigating the evils have been debated, 
thus far without result. The older counsel was to encourage 
saving deposits and to assist the people to utilize very small 
savings for this end. But to this plan there are very grave 
objections, since it is an attempt to lay the burden of indus- 
trial risk altogether on the poor and compel them to carry 
the accident insurance burden which all admit should be 
borne by the business which causes the risk. Furthermore 
the sum which can by any possibility be saved by unskilled 
workpeople is utterly inadequate at any time and especially 
during the first years of married life when the expense of 
rearing children increases and consumes all earnings. 

The chief causes of the extravagant insurance premiums 
to the poor are: (a) the unfair part of the receipts from 
premiums and interest which is kept by the chief officers 
of the companies from the dividends of the insured; (b) 
the excessively high salaries of the officers of administra- 
tion; (c) above all the fees to agents for soliciting insur- 



i66 INDUSTRIAL INSURANCE 

ance under the weekly collection plan. The first and second 
causes of waste may be to some extent reduced by the legis- 
lative and administrative action of the states, by publicity 
of accounts, and by inspections and rules of management. 
But not in any such direct way can political means reduce 
the third and most important cause of waste of the contri- 
butions of low-paid workingmen. If we are ever to place 
the business of industrial insurance on a fair and economic 
basis the agent must be dismissed ; all other means of relief 
are relatively insignificant. Assuming that every director 
is honorable, that expenses of administration are reduced to 
a minimum, that the agents themselves are paid a mere 
pittance, yet the system itself must necessarily absorb a very 
great sum from the hard-won earnings of the working- 
people. This argument has been urged by the advocates of 
the savings-bank method of industrial insurance in Massa- 
chusetts. A society 6 has been formed in Boston for the 
purpose of securing legislation permitting the savings banks 
to go into the life-insurance business; and the necessary 
law has been passed. Among the founders of this associa- 
tion are numbered men of education, philanthropy, and busi- 
ness standing; some of them would be glad to help intro- 
duce compulsory insurance in some form, but are dis- 
couraged from making efforts in that direction by the apathy 
of the public, the failure of the bill offered in 1904, and by 
the constitutional and economic obstacles which confront 
all such attempts in this country. Some of the savings 
banks have declared their readiness, in case they are em- 
powered by law, to try the proposed experiment. Under 
the plan proposed there would be no expense of solicitation 
by agents: the commodity would be offered, and then the 
banks would depend on the education of the people to induce 
them to take advantage of the opportunity of insuring them- 

6 The Savings Bank Insurance League. 



PRIVATE INSURANCE COMPANIES 167 

selves at bare cost. It is argued by the friends of this 
movement that the savings banks not only in Massachusetts 
but elsewhere have won the confidence of the country by 
their honest and careful management of the deposits, and 
in some instances the administrators, with the exception of 
a few salaried officers, perform their duties without charge 
and for the public good. Thus the savings banks, especially 
in Massachusetts, seem to be the most promising agencies 
for cheap insurance. 

On the other hand the representatives and managers of 
the regular, orthodox life-insurance companies think they 
have discovered the Achilles-heel of this scheme. They 
assert that comparatively few persons, least of all the very 
poor who most need relief, can be induced to apply volun- 
tarily for insurance without the persistent labor of agents. 
The employment and payment of agents is a necessary and 
legitimate expense, since without it working-people must 
go without the needed benefits. It is asserted by these advo- 
cates of present methods that the founders of the new 
association, however estimable and amiable, must lack 
knowledge of the business and the history of life insurance, 
that they are mere theorists and impractical. In support of 
this contention they cite the experience of the British com- 
panies who have tried a- similar scheme, the old Equitable, 
the London Life, and the Metropolitan of London. Still 
more striking is the example of the industrial insurance 
societies whose purpose is to guarantee burial money for 
working-people. The British Post-office Department has 
offered small policies for forty years at low cost. These 
policies are written at local post-offices and the premiums 
may be paid in weekly instalments. At the end of the year 
1904, after forty years' trial, the government insurance 
office had in force only 12,875 policies of this kind; while 
the Pearl Life Assurance Co. of London, which began 



l68 INDUSTRIAL INSURANCE 

operations only a year earlier than the post-office, had in 
force 2,320,463 policies, and the Refuge Assurance Co. of 
the same age as the Pearl, had 2,628,650 industrial policies 
in force. The Prudential Assurance Co. of London, only a 
little older than the post-office department of insurance, had 
in force at the end of the year 1904 between fifteen and 
sixteen million policies. During the year 1904 the post- 
office, with its 23,068 branch offices wrote only 517 new 
policies. The Prudential of London in the same year 
wrote 71,700 industrial policies. The conclusion of these 
experts and representatives of the insurance companies 
therefore virtually is that there is no relief for the working- 
people; the only outlook is that they must continue to bear 
this heavy burden. 

Of course the philanthropists of Massachusetts may be 
able to set in motion educational agencies to reverse this 
condition and win customers to their savings-bank insurance 
companies. Already the powerful associated charities are 
considering methods of co-operation with the insurance 
associations; and with their fine organization of friendly 
visitors they might accomplish much; how much, only trial 
can reveal. But in any case these associations must still 
leave the great problems of accident and sickness insurance 
at one side; they cannot solve these problems, for only 
compulsory insurance can ever, at one stroke, make insur- 
ance even general. 

A recent authoritative statement regarding the Massa- 
chusetts old-age annuities, has been made by Louis D. 
Brandeis : 7 

The American Federation of Labor has always striven to make 
the American wage-earner independent. With this end in view its 
members strongly urged upon the Massachusetts legislature last year 
the passage of the savings-bank insurance and annuity bill already 

7 American Federationist, Aug., 1908, p. 595. 



PRIVATE INSURANCE COMPANIES 169 

discussed in the American Federationist. That act has now been put 
into operation. The Whitman Savings Bank opened its annuity and 
insurance department June 18, 1908. The People's Savings Bank of 
Brockton, of which ex-Governor Douglas is president, will soon fol- 
low and a wide extension of the movement is expected. 

The movement rests upon this economic truth long ignored, but 
now gaining general recognition: Wages to be "living wages" must 
enable the workingman to make adequate provision for the future. 
Wages are not "living wages" if they provide merely a sum sufficient 
to pay for adequate food, shelter, clothing, education, and recreation. 
They must leave a surplus which, if properly used, will provide for 
the contingencies of the future for superannuation or premature 
death as well as against accident, sickness, or unemployment. The 
"cost of living" includes the daily pro rata of such sum as is neces- 
sary to make this provision for the future. Its cost is a fixed charge 
upon the workingman's living. If he does not pay it by setting apart 
every week or month a proper contribution from current wages he or 
those dependent upon him must eventually become a burden upon 
family or friends or the community. 

The recognition of this economic truth is leading to a demand in 
nearly every industrial country for some old-age provision for wage- 
earners. Germany adopted a quarter of a century ago a compulsory 
system of old-age insurance, the burden to be divided between 
employer, employee, and the state. England having meanwhile ignored 
this economic truth is being driven now to an old-age pension resting 
upon general taxation a modified form of pauper relief. Massa- 
chusetts aims to pursue a policy more in harmony with her traditions 
and American institutions. She seeks to secure for her wage-earners 
voluntary, not compulsory, old-age insurance, to make her superannu- 
ated workingmen independent instead of dependent, to relieve instead 
of further burdening general taxation. 

Massachusetts is undertaking to make saving popular by insuring 
to the saver everything his money can earn. Under her new system 
the terrible waste of insurance solicitors' and collectors' fees, of high 
salaries, and of exorbitant dividends to stockholders, which charac- 
terize the industrial insurance companies, will be avoided. Annuities 
and life insurance will be furnished to the wage-earners at the lowest 
possible cost. The only dividends will be those paid to the policy 
holders, who will get their equitable share of all the profits of the 
business. 



170 INDUSTRIAL INSURANCE 

The Massachusetts state actuary in a pamphlet entitled "Who Will 
Pay Your Wages When You Are Old and Gray?" shows clearly how 
the savings banks will supply this great need of the wage-earner. 
Extracts follow: 

"THREE THINGS NECESSARY 

"There are three things that every man should do: 

"First, Save enough money to take care of himself in his old age. 

"Second, Save enough money to take care of his family in case 
he dies. 

"Third, Save enough money to take care of himself and family 
in case he or one of the family is sick. 

"By means of the savings banks you have been able to save money 
for object No. 3, but what about the other two? 

"There is only one way by which you can do both of those things 
at one and the same time. That is by buying an insurance and 
annuity policy, and the only place for wage-earners to get such a 
policy is in one of the savings banks of Massachusetts." 

The insurance and annuity policy is then explained thus : 

"This policy provides that you deposit with the bank a small 
premium each month until your sixty-fifth birthday. 

"The bank, after you attain the age of sixty-five years, will pay 
you a certain sum of money every year during your life, or in case 
of our death prior to that time, a certain sum of money will be paid 
to your family at your death. 

"For example : Suppose you are twenty-one years old on your 
next birthday. You deposit with the bank $1.13 every month until 
your sixty-fifth birthday. 

"The bank, on your attaining the age of sixty-five years, will pay 
you $100 every year during your life, or, in case of your death before 
that time, the bank will pay $500 to your family at your death. 

"Furthermore, your policy will receive its share of the profits 
earned by the insurance department of the bank. 

"Here is a policy just suited to your needs. It will help to take 
care of you after your working days are done as no other means can. 

"Regularly once a year, after you are sixty-five years of age, the 
bank will deposit one hundred dollars to your account in the savings 
department where it will earn interest, and from which you can draw 
each week enough money to pay for your needs. 



PRIVATE INSURANCE COMPANIES 171 

"Besides doing all that, it protects your family in case of your 
death until you are sixty-five years of age, when the annuity begins. 

"A young man can buy this policy for less money than he can buy 
a life policy in an insurance company that employs house-to-house 
collectors. 

"Suppose you are twenty-five years old and pay to the savings bank 
$1.30 each month and your neighbor who is the same age pays $1.35 
each month to the insurance company. 

"When you reach the age of sixty-five, you will have no more 
deposits to make. Instead of making deposits you will begin to 
receive an annuity of $100. 

"While you are enjoying the fruits of your saving, your neighbor 
will still be paying $1.35 every month to the insurance company and 
he will have to continue paying this amount until he is seventy-five 
years old. 

"Which would you rather be, your neighbor or yourself? 

"If he takes out a policy at eighteen, paying $i premium a month, 
he will get, in case of death before sixty-five, at least $496. If he lives 
longer he will get $99 a year, beginning at age sixty-five and con- 
tinuing until he dies. He may get considerably more; for he gets 
besides the fixed amount of insurance his share of the profits." 

While the Massachusetts insurance and annuity act prohibits the 
savings banks from employing solicitors and collectors, it provides in 
the completest manner for the establishment of agencies through 
which annuities and insurance may be secured and premiums and 
benefits be paid. It is proposed that the opportunities for saving 
money should be made, if possible, as numerous and as convenient 
as the opportunities for spending it. Not only may each savings bank 
become an agent for others, but agencies may be established in facto- 
ries or stores and by other organizations. 

Widespread education as to the advantages of the system are, 
of course, essential to its success. But in this necessary work of edu- 
cation long strides have already been taken. The enlightening cam- 
paign which preceded the passage of the act resulted in a wide dis- 
cussion of the subject in every part of the state. Nearly 300 labor 
unions joined in the effort to secure the requisite legislation. 

The presidents of the state branch of the American Federation of 
Labor, of the Boston Central Union, and the International Tex- 
tile Workers' Union thus representing Massachusetts' leading indus- 
tries were among its most enthusiastic supporters. The movement is 



172 INDUSTRIAL INSURANCE 

thus assured of a broad sympathy from the wage-earners. It has 
secured the same cordial support from employers, from social workers, 
and other public spirited citizens. 

The efficient administration of the new law is assured. It is under 
the general supervision of the trustees of the general insurance 
commissioner; and the savings insurance and annuity banks are under 
the general supervision of the trustees of the general insurance 
guaranty fund. The members of this board are appointed by the 
governor from among the trustees of the savings banks. They are 
men of influence and ability and are filled with zeal for this impor- 
tant work. 

Another Massachusetts scheme seems to deserve notice 
in this connection, although the corporation has not yet 
begun active operations. The statement is furnished by the 
actuary, Mr. M. C. Bradley, and the names of the incor- 
porators are representative of New England intelligence, 
integrity, and philanthropy. 

STATEMENT OF THE ORGANIZATION AND PLANS OF 
THE MUTUAL DIRECT LIFE INSURANCE SOCIETY OF 
BOSTON 

The Mutual Direct Life Assurance Society of Boston was incor- 
porated by special act of the Massachusetts legislature (chap. 368, 
1907; chap. 88, 1908). The principal provisions of the charter are: 
that the society shall have a paid-up capital of $200,000, and a paid-in 
surplus of $100,000, all of which, until retired, shall be entitled to 
cumulative dividends from earned surplus at a rate not to exceed 5 
per cent, per annum; that the capital and surplus shall be retired, 
making the society purely mutual, as soon as it can be, and still leave 
a surplus of $100,000; that the society shall not employ any person 
to solicit business or to make house-to-house collections of premiums; 
that it may appoint correspondents, establish offices, and adopt means 
for the receipt of applications for assurance and for the deposit of 
premiums and annuity payments; and that, except as provided in the 
act of incorporation, the society shall be amenable to all the assurance 
laws of Massachusetts. 

Renewal premiums may be deposited with the correspondent who 
is most convenient, or may be sent by mail to the society direct. So 



PRIVATE INSURANCE COMPANIES 173 

that not more than one visit need be made to the office of a corre- 
spondent. Indeed, those who wish may conduct by mail all the 
negotiations except, in the case of life assurance, the medical exami- 
nation. 

As the growth of the society warrants, branch offices will be main- 
tained in the different states, in charge of salaried managers who will 
instruct the correspondents, explain the plans of the society to social 
and labor organizations, and to the employers of labor. 

In the Mutual Direct the chief officers will receive at most only 
nominal salaries. So that the society can safely reduce the premiums 
for life assurance at least 10 per cent, on the average, grant surren- 
der values from the first year, and still return to policy-holders 
dividends, so called, as large as, or larger than those being paid by 
the best managed agency companies. 

With the patronage of those who carry policies in amounts from 
$1,000 up to really large sums, the society will merit the favorable con- 
sideration of the officers of wage-workers' societies and trade-unions, 
and of employers of labor. They will appreciate the stamp of approval 
that thai patronage represents. They can, with propriety, and will, 
it is believed, be inclined to secure proportionate benefits from the 
society for their members, or for their employees. 

To these will be especially attractive the society's plans for annui- 
ties. It is proposed to issue, besides the usual immediate and deferred 
annuities, a contract for an annuity becoming due nominally at age 70, 
but which may be entered upon at any earlier age, whenever the 
annuitant elects, the amount being equitably reduced. The contract 
will provide that payments, within certain limits, may be made at any 
time, the total annuity at age 70 (or at the earlier ages) being corre- 
spondingly increased by each such payment. Tables printed in the 
contract will show what annuity at age 70 can be purchased by the 
deposit of any specified amount at any specified age; and in what pro- 
portion the annuity will be reduced by being entered upon at any age 
earlier than 70. 

The organization can be used by employers in any state 
for the purpose of providing pensions for employees. Each 
year's revenues are charged only with the amount that year's 
business warrants. The pension of the employee is certain 
and of a definite amount, not contingent on the future 
policy of his employer or upon the future prosperity of the 



174 INDUSTRIAL INSURANCE 

business ; and the employee is not bound by financial interest 
to any particular employer. The plans and rates are not 
ready for publication at the time of writing. 

II. CASUALTY INSURANCE COMPANIES 

In the absence of social organization by the states, certain 
accident insurance companies have entered into competition 
with trade unions and mutual benefit societies to furnish the 
desired accident and sickness insurance for wage-earners. 
We have not yet at hand satisfactory statistics of the opera- 
tions of these companies, and we are told by some of them 
that they dare not let rival companies even see their reports 
on account of the exigencies of competition. The reports 
which have been published do not always distinguish the 
economic classes of their clients, and so do riot inform us 
what number of wage-earners are included. Skilled artisans 
and well-paid mechanics may be able to pay for a fair 
amount of accident and sickness insurance, but the rates are 
prohibitive for those on bare living-wages, and these are in 
the great majority. Even when insurance is taken there is 
common and growing complaint that the contracts are 
narrow and narrowly interpreted in settlements. Thus it 
is claimed that many diseases are included which rarely 
occur and many omitted which are very common; so that 
in reality more is promised than is paid. It is asserted that 
there are so many technical clauses modifying the agree- 
ments that no man can know in advance what his claim 
actually is. But the need of insurance is so widely and 
keenly felt, and the misery of being without protection is 
so intolerable, that the business of these companies is grow- 
ing and is already considerable. Not seldom the employers 
are disposed to assist the introduction of this form of insur- 
ance in their establishments, since they know its value to the 
men and realize that men who are insured are somewhat 



PRIVATE INSURANCE COMPANIES 175 

less inclined to sue for damages in case of injury if they have 
some benefits coming in during disability. The companies 
began with accident insurance, but the demand for sickness 
insurance led some companies to offer this and competition 
is driving other companies to follow their example. 

The workmen's collective policy. The essential feature 
of this plan is to include all the employees of a firm or cor- 
poration in a single contract which insures them against loss 
by reason of accident or accident and sickness. The em- 
ployer pays a premium which is based on the number of 
employees, the hazard of the occupation, and the amount of 
wages. The insurance company agrees to pay indemnities 
according to a graduated scale. Then the employer makes 
a contract with his employees according to which he is 
authorized by them to retain a weekly sum from their wages 
to reimburse him for payment of premiums. Rarely, the 
employer pays a part or even all the premiums himself 
without taking anything from wages. The premium ad- 
vanced is based provisionally on the estimated number of 
workmen and the -amount of wages for the coming year; 
if at the end of the year it appears that the force has been 
increased a supplementary sum must be paid the company 
insuring; and if the pay-roll shows that the premium ad- 
vanced was too large the insuring company returns the 
excess. The employer acts as trustee of the men and is 
paid for his trouble usually 5 per cent, for cost of collecting 
premiums. If, as sometimes happens, the employer insures 
himself against damage suits, another 5 per cent, is deducted 
from the premium. Both forms of insurance may be cov- 
ered in one policy. This form has suggested some of the 
features of the bill proposed by the Illinois Industrial Insur- 
ance Commission. 

A few examples are given of various forms of insurance 



1 76 INDUSTRIAL INSURANCE 

of large numbers of employees. The General Accident In- 
surance Company of Philadelphia deposits $100,000 with 
the Pennsylvania Insurance Department to give a guarantee 
of all contracts. In its industrial department it writes 
policies for workingmen's indemnity, which it describes as 
a collective policy issued to the employer as trustee for his 
employees, furnishing health and accident insurance for 
monthly premiums, paying monthly benefits to employees 
for loss of time caused by accident, not to exceed fifty- two 
consecutive weeks, no matter when or how the accident 
happens, whether in factory, going to or from work, or on 
recreation. Substantial benefit is paid if the insured is 
killed by accident, or for the loss of one or more limbs or 
eyes. Sick benefits are paid for every disease to which flesh 
is heir, while the insured is confined to the house, after the 
policy has been in force thirty days for a limit of six 
months, with the exception of rheumatism, paralysis, tuber- 
culosis, Bright's disease, for which full indemnity is paid 
for a limit of two months in any one year. In addition, full 
medical or surgical attention is given, whether disabled or 
not. Inducements are offered to the employers to encourage 
the introduction of their plan in shops and mills. The 
language of the advertisement is quoted : 

This form of insurance *is 50 per cent, cheaper than any other 
form of workmen's collective insurance that has ever been offered. 
We save from 25 to 50 per cent, on the cost of your employers' lia- 
bility insurance by introducing this form of insurance in your plant. 

In the policy occurs a clause which shows how cost of 
employers' liability is reduced: 

The acceptance by an employee, or any other person who may be 
entitled thereto, of a benefit under this policy for injury or death of 
the employee, shall operate as a release of all claims for damages 
against the assured arising from such injury or death which could be 



PRIVATE INSURANCE COMPANIES 177 

made by or through the employee, or any other person, and the person 
so accepting the benefit shall execute such further instruments as may 
be necessary formally to evidence such acquittance. 

This form of policy is increasingly objectionable to 
workingmen, particularly where the employer contributes 
little or nothing to the premium, and it is becoming every 
day more unpopular. The workmen declare that it is unjust 
to ask them to make heavy sacrifices in loss of a portion of 
wages to build up a fund for insurance and then deprive 
them of enjoying it in case of injury unless they sign away 
their common-law rights to sue the employer for damages 
due to his negligence. This objection would lose its point 
if the employer contributed a sum substantially equal to that 
he must pay to protect himself from loss under the liability 
law. 

The New Amsterdam Casualty Co. has had some ex- 
perience with industrial insurance of the kind under consid- 
eration. The agreement with the insured is to indemnify 
against loss from bodily injuries sustained by an employee 
or employees of the insuring employer through external, 
violent, and accidental means, while actually engaged in the 
occupations and at the places mentioned in the schedule, and 
resulting from the operation of the trade or business des- 
scribed in the schedule. The president of this company says 
of this form of policy: 

Workmen's collective insurance is wholesale accident insurance, 
the policy running to the employer, and the protection thereunder 
being for the workmen whether the employer be legally liable for the 
injuries or not. In some cases the employer assesses the premium back 
on the men by deducting all or part of it from the wages, a certain per- 
centage being deducted on each pay day. The insurance company, 
however, assumes the full burden of reimbursing the men for injuries 
such as are covered by the policy. 8 

8 Letter of Mr. W. F. Moore, April 27, 1906. 



178 INDUSTRIAL INSURANCE 

The net premiums of this company by years have been 
as follows : 

Year Premiums 

1899 $ 2,322.97 

I9OO I3,6l8.IO 

^901 4,757-13 

1902 4,355-lS 

1903 3,15646 

1904 2,38l.75 

1905 3,269.15 



$33,86074 

Insurance of individual workmen. Some of the casualty 
companies do not attempt to do business among working- 
men but confine themselves to selected risks with persons of 
larger income who pay yearly and thus receive the benefit of 
lower cost for administration and for being in a less hazard- 
ous class. Companies which insure working men must, as a 
rule, collect the premiums monthly in small amounts. This 
increases cost of solicitation and collection which must be 
charged in the premiums. And since the policy must be 
renewed each year the cost of solicitation is still more 
increased. Under the plan of insuring individual workmen 
the company deals wth the insured more or less directly, 
although arrangements are sometimes made with employers 
to collect the premiums, in which case the collective form 
is closely approached. Sickness insurance is usually con- 
nected with accident policies and cannot otherwise be ob- 
tained. 

The Standard Life and Accident Insurance Co. of 
Detroit, Mich., may be used for illustration. ( Fide Instruc- 
tions of March, 1906.) This company employs agents to 
solicit business, and it has local agents in towns and cities, 
not for the purpose of calling upon the policy-holders but 
for furnishing convenient means of collecting premiums. 



PRIVATE INSURANCE COMPANIES 179 

A drug store is preferred for a local agency because it is 
open in the evening. A commission of 5 per cent, is allowed 
the collector for receipting and remitting the premiums of 
policy-holders. Women between the ages of eighteen and 
forty-five engaged in occupations from which they derive a 
regular income, and on which they depend for support, will 
be granted insurance in the sum of $25 per month accident 
and illness indemnity, with $200 accidental death insurance 
for a premium of $i per month. Those desiring larger 
indemnities must be classified according to occupation and 
pay a premium 50 per cent, higher than that specified in the 
rate table. In no event will they be written for more than 
$50 per month accident and $40 per month illness benefit, 
nor to exceed three-fourths of their average income. Over- 
insurance is avoided in all cases. The indemnity should not 
exceed three- fourths of the average actual money value of 
the insured's time, or of the amount of his monthly salary 
or wages. The insurance is not forfeited by change of 
occupation, but in the event of receiving an injury when 
engaged in a more hazardous occupation, the sum insured 
and the monthly indemnity will be for such amounts as the 
premium paid shall be sufficient to purchase at the rates 
fixed by the company tables for such increased hazard of 
occupation. Insurance is not written on any person who is 
under seventeen years or over sixty. Applicants between 
fifty and sixty pay 50 per cent, additional premium. There 
is no graduation of premiums between seventeen and fifty 
years. The beneficiary must have an insurable interest in 
the life of the insured, as wife, child, parent, or other heir- 
at-law, or must be a dependent relative, fiancee, or a chari- 
table institution. In case of accidental injury to, or sickness 
of, any person insured in this company, for which a claim 
is likely to be made, immediate notice must be given. Pay- 
ments of claims are made by check to the insured or agent 



i8o INDUSTRIAL INSURANCE 

after investigation and adjustment. Surgeons are appointed 
in localities where the business is large enough to warrant 
such an appointment, and their duty is to protect the inter- 
ests of the company. Premiums are payable monthly in 
advance at the home or branch office. The detailed defini- 
tion of accident indemnity is significant. Full accident 
indemnity is paid for accidental death, loss of one or more 
limbs, or both eyes, and for loss of time, resulting from 
bodily injuries caused solely by external, violent, and acci- 
dental means such as dislocation, fractures, broken bones, 
bruises, cuts, shot wounds, crushing or mangling, burns or 
scalds, bites of dogs and serpents, stroke of lightning, 
drowning, or injuries produced by falls, or any other purely 
accidental injury happening to the insured in any of the 
lawful vocations of life, whether such accident happen at 
home, or in the office, going to or from work, in the store, 
factory, shop, mill, yard, or on the street or farm, traveling 
on passenger trains, street cars, steamboats, walking, riding, 
driving, boating, etc., but will not be paid except at one-fifth 
the indemnity otherwise stated, in case of disappearance, or 
suicide, sane or insane; nor for any injury, fatal or non- 
fatal, resulting wholly or partly, directly or indirectly, from 
intoxication or the use of narcotics, or while violating 
law, war risks, inhalation of gas, vapor, or anaesthetic, 
voluntary over-exertion, wilful or gross negligence, un- 
necessary exposure to apparent danger, surgical operations 
not necessitated solely by injury and made within ninety 
days after the accident. Sick indemnity is paid for the time, 
after the first week, that the insured is necessarily confined 
to the house by reason of any disease or illness, except 
rheumatism, paralysis, lumbago or lame back, hernia, 
orchitis, sciatica, insanity, dementia, and venereal diseases, 
which would be covered by one-fifth the regular indemnity. 
Some risks are prohibited ; the following will not be accepted 



PRIVATE INSURANCE COMPANIES 



181 



for insurance on any terms : Persons who are blind, deaf, 
dumb, feeble-minded, cripples, intemperate, disreputable, or 
persons without visible means of support, those engaged in 
gambling, in handling highly inflammable or highly ex- 
plosive material in factory or warehouse, aeronauting, 
driving, submarine working, rubber grinding or mixing; 
electricians handling live wires or working about machines 
where it is possible to receive a direct current of 500 volts, 
or an alternating current of 250 volts ; professional baseball 
players, laborers or machinists employed in constructing 
tunnels or caissons; soldiers or sailors engaged in active 
warfare; blasters, insane persons, persons compelled to use 
a crutch, subject to fits or vertigo, who have suffered from 
paralysis, or are paralyzed, or have any deformity that will 
in any way hinder the regular duties of life; powder-makers, 
circus performers, fishermen on the sea, fireworks' em- 
ployees and employers, cartridge makers, football players. 
There are ten classes of risks; select, preferred, extra- 
preferred, ordinary, extra-ordinary, medium, extra-medium, 
hazardous, special hazardous, and there is a table of in- 
demnity and cost for each class. Thus the table of indem- 
nity and cost for the select class is : 

TABLE IX 





Monthly 
Accident 
Indemnity 


Monthly 
Illness 
Indemnity 


Accidental 
Death <5r 
Loss of Two 
Limbs or 
Both Eyes 


Loss of 
One Limb 


Cost per 
Month, 
Regular 
Policy 


Cost per 
Month, 
Special 
Policy 


I 

2 

3 
4 


$50 

60 
60 
70 
80 


$50 
40 
60 
60 

CQ 


$ 500 
600 
600 
700 
800 


$250 
300 
3 00 

35 
400 


$I.OO 
I. 00 

1-25 

1.40 

I ?O 


$1.50 
1.50 

i-75 
1.90 

2 OO 


^ 


80 


60 


800 


dOO 


ilo 


2 IO 


7. 


TOO 


60 


I OOO 


C.OO 


I 7 C. 


2 2^ 

















Additional accidental death insurance will be written 



182 



INDUSTRIAL INSURANCE 



in this class at 25 cents per month for each $500. Appli- 
cants over fifty years of age must pay 50 per cent. more. 
The table of the special hazardous class is : 

TABLE x 



Monthly 
Accident 
Indemnity 


Monthly 
Illness 
Indemnity 


Accidental 
Death or Loss 
of Two Limbs 
or Both Eyes 


Loss of One 
Limb 


Cost per 
Month, Regular 
Policy 


Cost per 
Month, Special 
Policy 


$15 


$15 


$IOO 


$50 


$1.00 


$i.2 5 


2O 


2O 


IOO 


50 


1 .40 


I.6 S 


25 


2 S 


IOO 


50 


i-75 


2.OO 


3 


3 


IOO 


50 


2. 25 


2.50 


35 


35 


IOO 


50 


2.60 


3.10 


40 


40 


IOO 


50 


3.00 


3-50 



Additional accidental death insurance will be written in 
this class at $i per month for each $500, with a limit of 
$1,000. Male applicants over fifty years of age must add 
50 per cent, to the above premiums. 

This company has a special arrangement for "railroad 
instalment insurance." No person may be insured under 
the accident policy under eighteen or over sixty-five years 
of age, nor in the sickness policy over sixty years of age. 
The rates are the same for all ages. The rates for loco- 
motive engineers are : 

$1,000 death benefit and $5 weekly indemnity, annual premium, $18.00 
$1,000 death benefit and $20 weekly indemnity, annual premium, $50.40 
$2,000 death benefit and $10 weekly indemnity, annual premium, $36.00 
$2,000 death benefit and $20 weekly indemnity, annual premium, $57.60 

The maximum limit for engineers is $2,000 death bene- 
fit and $20 weekly indemnity; for firemen, $1,500 death 
benefit and $15 weekly indemnity. The annual premium for 
weekly indemnity alone is $10.80 for $5 or $43.20 for $20 
weekly indemnity. The insured gives an order on the pay- 
master of the railroad company, according to previous 
contract, and the premium is taken out of the monthly pay. 
The figures of business in the year 1905 were: accident 



PRIVATE INSURANCE COMPANIES 183 

premiums received, $818,973, and losses paid, $384,733; 
health premiums, $102,757, losses, $40,971. The statement 
does not show how many were wage-earners. 

The Continental Casualty Co. of Chicago does a large 
business in accident insurance. In the year 1905 it collected 
from wage-earners in premiums $1,675,000; of this sum 
about $500,000 was collected upon the industrial or "one- 
dollar-per-month plan." This company has already paid 
out to wage-earners for death benefits, sickness, and acci- 
dent indemnities over $5,615,000. 

Experiments are tried with various forms of sickness 
insurance and provision for invalidism. In discussing the 
burial benefit companies ("industrial insurance") we have 
seen that after an effort to unite sickness insurance with 
their business they abandoned the attempt, although the 
assessment companies studied by Forman in Washington 
still offer sick benefits in some policies. The chief difficulty 
in the experience of the most important companies was that 
there was no check on malingering and the cost was too 
high. Their officers thought that only in moderately small 
groups of fraternal societies would sickness insurance be 
practicable. The Health Insurance Co. of Philadelphia and 
several companies in Massachusetts attempted to furnish 
sickness insurance about 1847. The Philadelphia company 
started with a capital of $100,000 in 1848, used the tables 
of the English friendly societies as a basis of calculation, 
and charged from $5.25 to $6.25 for a weekly indemnity to 
cover loss from any kind of disease. Although commissions 
of agents were then very much lower than they could be 
now all these experiments ended in failure. Similar experi- 
ments and attempts in various parts of the country came to 
the same inglorious end; but so great is the need of such 
insurance, so disastrous the effects of being without protec- 
tion, it was inevitable that the experiment should be revived 



184 INDUSTRIAL INSURANCE 

in some form. About 1896 some company introduced as a 
"rider" to an accident insurance policy an agreement, for 
a consideration, to pay indemnity in case of six zymotic 
diseases. This bait for accident insurance proved so 
attractive to customers that about 1899 several companies 
extended the list of diseases to ten or twelve, at a premium 
rate of $2 for each $5 of weekly indemnity, and under stress 
of competition among accident insurance companies the list 
was still further enlarged until about thirty or more were 
covered. Experience taught the companies, for a rather 
high tuition fee, that some of them had not charged enough 
for certain diseases to cover their risk and that the attempt 
to distinguish the nature of the sickness added to the con- 
fusion and cost attending adjustment of claims. To meet 
this situation a so-called General Disability Policy was 
introduced. 

There can be no doubt that a policy cohering any sickness origi- 
nating in an individual after the beginning of his policy will afford 
less cause for misunderstanding and disagreement between the com- 
pany and its policy-holders, and that physicians will be less frequently 
called upon to stretch their consciences in diagnoses for the pur- 
pose of assisting their patients, than has been the case with the 
restricted sickness policy, and since many of the companies have taken 
up sickness insurance as an adjunct to accident insurance, merely as 
a means of holding their accident insurance against the aggressions 
of competing companies, any plan likely to secure this result with a 
minimum of friction and misunderstanding between the company and 
the assured would seem to commend itself to the underwriter if the 
cost does not prove to be too much of a tax upon the business which 
it is intended to protect. 9 

Another suggestion has been made to diminish the cost 
of sickness insurance by connecting it with other kinds of 
insurance. It is evident that if one fee for soliciting and 
adjusting claims could be made to cover all forms of insur- 

8 R. S. Keelor, M.D., American Experience with Invalidity, 1904. 



PRIVATE INSURANCE COMPANIES 185 

ance desired, the sum of cost would be reduced, especially 
if the fee for solicitation did not have to be paid over each 
year. At present the company retains the right to stop pro- 
tection at the end of any year or to increase the rate with 
age until it becomes prohibitive. Furthermore the benefit 
is limited to a relatively brief period, usually twenty-six 
weeks, while the need is for indemnity as long as sickness 
lasts. Mr. Dawson recommends that sickness insurance 
be joined with life insurance, for thus 

it is possible to furnish at a much lower cost, because of lower expense 
in the payment of commissions, indemnity for the whole course of 
the disability, renewable without increase of premiums and at the 
option of the insured. Abundant statistics upon which to base these 
rates are now obtainable. 10 

Information from the mining region of the western 
states is difficult to secure, and therefore the statement of 
the superintendent of social welfare of the Colorado Fuel 
and Iron Co., Pueblo, Colo., is welcome. 

This company provides medical attendance and hospital care for 
its employees and their families as long as they are sick, for which 
the men pay $i per month. Privileges of the hospital, however, are 
extended only to the employees and not to their families, but a special 
rate is given to members of employees' families. All medical attend- 
ance outside of the hospital, including medicines, is furnished both to 
the men and to their families. Some years ago this company attempted 
to insure its miners against accidents, but the plan was not successful 
and so the plan at present followed by this and all other mining cor- 
porations in Colorado is to permit the agents of reliable insurance 
companies to go into the mines and solicit, the company guaranteeing 
the agents the amount of premium which is then deducted from the 
men's pay-roll. The foreign miners also have a number of sick benefit 
societies, but they do not play a very prominent part in the matter 
of insurance, as they are usually small organizations. 11 

10 The Business of Life Insurance, p. 244. 

11 Letter of Dr. R. W. Corwin. 



186 INDUSTRIAL INSURANCE 

One point deserves special mention in connection with 
the assertion that compulsory insurance would be impossible 
unless all states introduced it at the same time, since the 
manufacturers of the state having compulsory insurance 
would have to carry heavier premiums than the managers 
in states which have not such laws. A part answer to this 
argument is found in the fact that already the cost of acci- 
dents must be borne in gifts, taxes for poor relief, and 
various schemes to which employers contribute for the relief 
of disabled men ; and further, it may be claimed that insur- 
ance so greatly increases the contentment, steadiness, and 
efficiency of the insured workmen that premiums are largely 
returned in an equivalent of some kind. It may be added 
that if compulsory insurance were introduced in one state 
its advantages would soon be seen to be so great that public 
sentiment, reinforced by trade unions, would speedily make 
the law general in all industrial states. Still further, it is 
precisely those states, as Massachusetts and New York, 
which lead in social legislation which retain the first rank 
as industrial states. To all this we may add certain facts 
furnished by casualty companies, which tend to diminish 
the fears of timid capitalists that compulsory insurance 
would place them at a disadvantage as compared with the 
employers of other states; the fact being that already, in 
consequence of the differences of court interpretation and 
legislation, the cost of employers' protection varies greatly 
in different states, without any of the dreadful things hap- 
pening which are feared. Thus if we take the cost of 
liability insurance for the whole country as one, on the 
average, the cost for several states would be relatively as 
follows : 

The figures are stated on a basis of a loss cost of i for 
the United States as a whole. If then the relative loss cost 
of a state is given as 1.2, the meaning is that the loss cost 



PRIVATE INSURANCE COMPANIES 



187 



in that state is twenty per cent. (20 per cent.) greater than 
for the United States as a whole. A relative loss of 2 
designates a loss cost twice as great as that for the United 
States as a whole. A relative loss cost of .80 designates a 
loss cost eighty per cent. (80 per cent.) of that for the 
United States as a whole. 

The loss cost of one state relatively to another may be 
ascertained by taking the ratio of their relative loss cost. 
Thus, the loss cost in Tennessee is four times as great as 
the loss cost in Pennsylvania, the relative loss cost of Ten- 
nessee being 2, that of Pennsylvania being 0.50, and the 
ratio 2-^40.50. 

TABLE OF RELATIVE LOSS COSTS TO EMPLOYERS IN THE 
SEVERAL STATES BY REASON OF THE LIABILITY IMPOSED 
BY LAW UPON THEM FOR DAMAGES ON ACCOUNT OF 
BODILY INJURIES OR DEATH ACCIDENTALLY SUFFERED 
BY THEIR EMPLOYEES* 

TABLE OF STATES LISTED ALPHABETICALLY 



Alabama 1.20 

Arizona Territory. . 2 . oo 

Arkansas 1.33 

California i . oo 

Colorado 2 . oo 

Connecticut 60 

Delaware 1.33 

Dist. of Columbia .90 

Florida 60 

Georgia i. 20 

Idaho 2.00 

Illinois 1.33 

Indiana i . 20 

Indian Territory . . . 2 . oo 

Iowa 1.33 

Kansas ... . . 2 . oo 



Louisiana 70 

Maine i.oo 

Maryland 70 

Massachusetts i . oo 

Michigan 60 

Minnesota i . 33 

Mississippi 80 

Missouri J-33 

Montana 2 . oo 

Nebraska i . 33 

New Hampshire. . . i . oo 

New Jersey 70 

New Mexico Ter. . 2 . oo 

Nevada 2.00 

New York i . oo 

North Carolina. . . . i . 20 
North Dakota 2 . oo 



Ohio 80 

Oklahoma Ter 2. oo 

Oregon 80 

Pennsylvania i . oo 

Rhode Island i . 33 

South Carolina. . . . i . 20 

South Dakota 2. oo 

Tennessee 2 . oo 

Texas 2.00 

Utah 2 . oo 

Vermont i . oo 

Virginia 70 

Washington 2 . oo 

West Virginia 70 

Wisconsin 1.33 

Wyoming 2 . oo 



Kentucky 1.33 

* Frank E. Law, A Method of Deducing Liability Rates (1908). 

The differences between the states are due to differences 
in the law and in the judicial decisions interpreting the law. 

The above table is founded in the main on combined 
experience of the companies composing the Liability Con- 
ference, an association of companies engaged in the business 



i88 INDUSTRIAL INSURANCE 

of liability insurance. Where changes in the law have 
occurred subsequent to the period embraced by the experi- 
ence, comparative studies of the laws have been made and 
corrections made in the table accordingly. The table repre- 
sents accurately the relative costs at the date of writing. 
The ratios are constantly changing. 

It is worth while to consider the probable part which the 
casualty companies will play in the immediate future in rela- 
tion to the development of accident and sickness insurance, 
especially if permissive or compulsory laws should be passed 
in any of the states. 12 This matter has already been seriously 
considered. It is well known that in England under the 
Compensation Act and recently in France under a com- 
pulsory-insurance law, the private accident companies have 
done a thriving business in assuming the legal obligations 
of the employers. In France the mutual insurance associa- 
tions or syndicates, and even the government itself, through 
a central fund, are competitors of the private companies, 
and yet the latter hold their own and contribute very sub- 
stantially to the promotion of the purposes of the law. 
Nor are we entirely without experience in the United States, 
for the workmen's collective policies contain suggestions of 
a method which may be greatly extended if legal pressure 
or even encouragement were to make it to the interest of 
large bodies of employers and wage-earners to unite in 
securing protection. Already under the collective policies 
the expenses of solicitation have been reduced to a minimum, 
since the entire body of employees is included at a stroke 
under a contract which also lowers the cost of payments of 

12 Mr. H. G. B. Alexander, president of the Continental Casualty 
Company of Chicago, stated at a meeting of the International Association 
of Accident Underwriters, that the accident and health insurance com- 
panies had collected $25,700,000 in the United States in 1906, this being a 
gain of $2,783,000 over the preceding year. Health insurance showed an 
increase of 28.8 per cent, and accident insurance of 9.57 per cent. 



PRIVATE INSURANCE COMPANIES 189 

premiums by the simple process of deducting them from the 
wages. Uncertainty in regard to the indemnity would be 
reduced by legal definition of obligation and by simpler 
judicial organization for the adjustment of disputed claims. 
If the employers could be released from liability under exist- 
ing laws they could then have at their disposal a large fund 
which they are now compelled to expend on casualty com- 
panies and lawyers to protect themselves against suits for 
negligence ; and the insurance companies would then become 
insurers of the working-men rather than their sworn 
antagonists. 



CHAPTER VII 
FIRMS AND CORPORATIONS 

In this article railroad relief departments are excluded 
from consideration as they are treated in the next chapter. 
The relation between the two movements is very inti- 
mate. Before the railroads undertook their relief depart- 
ments experiments had been made on a small scale by 
private firms, and when the railroads had developed their 
plans with manifest advantage the employers of smaller 
numbers of men in turn enlarged their schemes and multi- 
plied their number. Meantime the size of manufacturing 
plants has rapidly increased, until now many of them rival 
railroad corporations in the magnitude of their enterprises 
and the number of employees. Some of the corporations 
also resemble the railroads in their prospects of permanence^ 
without regard to the persons who own their stocks and tem- 
porarily control their policies. This condition of affairs is 
favorable to the introduction of plans of old-age pensions, 
and especially of sickness and accident insurance. During 
the years 1905-8 there has been a marked increase in the 
amount of attention given to the development of such 
schemes. This has been due to various causes ; and, first of 
all, to the examples of success in the railroad relief depart- 
ments. Another cause has contributed powerfully to this 
tendency and will continue to operate with increasing mo- 
mentum until compulsory insurance makes it unnecessary. 
That cause is the tightening of the employers' liability laws 
and the strictness and even rigor with which they are inter- 
preted by many courts and applied in individual instances. 
It has been said by certain judges in high places that with 
a little more stringency the courts will practically make the 

190 



FIRMS AND CORPORATIONS 191 

law of negligence a compulsory insurance law, for the fact 
of accident seems to carry with it in such courts a presump- 
tion of negligence. The juries very generally act on this 
presumption, and elective judges, being human, are inclined 
to lean to the side of the workmen, whose votes are neces- 
sary to elect them. This tendency has received further 
momentum from the exposures of the frightful waste of 
life due to industrial accidents and diseases revealed by 
factory inspectors, reports of trade-unions, and by the Inter- 
state Commerce Commission. Public opinion has been 
thoroughly aroused and will not bear much more; it will 
soon demand all the protection that law can give to prevent 
injury and to compel each industry to bear its own costs. 
The exhibits of dangerous machinery, sweatshop evils, and 
tenement-house life in various cities have deepened these 
convictions and directed public attention to remedies. The 
expositions of the German government at Chicago in 1893 
and at St. Louis in 1904 have had their share in educating 
the public conscience and revealing a practicable plan for 
mitigating the sufferings incident to modern industry. 

It is almost impossible to tabulate the schemes of insur- 
ance here to be noticed; we shall describe certain examples 
and then endeavor to discover the tendency revealed in them 
all. Until the government report has been given to the 
world we shall not have anything like a complete catalogue 
of all these plans, but we have enough typical illustrations 
to furnish insight into the forces at work. 

The Westinghouse Air Brake Company Relief Depart- 
ment, Wilmerding, Pa,, was established in 1903. The 
company has charge of the relief department, is responsible 
for the funds, pays 4 per cent, interest on deposits, supplies 
facilities for office work, and pays operating expenses. The 
medical examiner is appointed by the general manager. The 
advisory committee is chosen, one-half by the company and 



192 INDUSTRIAL INSURANCE 

one-half by the members, the general manager being 
chairman. The relief fund is made up from voluntary con- 
tributions of members, income from investments, and contri- 
butions by the company when necessary to make up 
deficiencies. The members are divided into five wage 
classes: first, those receiving less than $35 per month; sec- 
ond, those receiving $35 to $55; third, those receiving $55 
to $75 ; fourth, those receiving $75 to $95 ; fifth, those re- 
ceiving $95 and more. No employee is required to become 
a member of the relief fund, and any member may withdraw 
after giving due notice. Usually a person loses membership 
when he for any reason ceases to be an employee. The 
monthly contributions are 50, 75, 100, 125, 150 cents accord- 
ing to wage class. The occasion for indemnity is disability 
due to either sickness or accident, and the medical examiner 
decides the question of disability. Benefits are not paid 
longer than thirty-nine weeks, although the right to death 
benefit continues during disability. Settlement may be paid 
in a lump sum. No benefits are paid where disability is 
due to intemperance, vice, or quarrel. The benefits each 
week for thirty-nine weeks are, according to class : $5, 
$7.50, $10, $12.50, $15, and surgical treatment is also given 
free. Injuries sustained while off the premises of the com- 
pany come under the rules of sickness benefits. The usual 
release clause in the contract reads : 

The acceptance by the members of benefits for injury shall operate 
as a release and satisfaction of all claims against the company for 
damages arising from or growing out of such injury; unless, within 
ten days from date of injury, notice is given to the superintendent 
of intention to seek indemnity from the company; and further, in the 
event of the death of a member, no part of the death benefit or 
unpaid disability benefit shall be due or payable unless and until good 
and sufficient releases shall be delivered to the superintendent, of all 
claims against the relief department as well as against the company, 
arising from or growing out of the death of a member. 



FIRMS AND CORPORATIONS 193 

The death benefit is $150, not much more than a sum 
necessary for expenses of illness and burial. Evidently this 
plan is accepted by the employees only because it is better 
than nothing or because they do not yet know what Euro- 
pean laws secure to wage-earners. 

The Pittsburgh Coal Company Employees' Association. 1 
This company has a capital of more than $100,000,000 
and an annual tonnage of $25,000,000. The theory of the 
managers relating to the necessity for industrial insurance 
is distinctly set forth in their circular, in which the depend- 
ence of workingmen upon wages is made the ground of a 
scheme of protection by co-operation : 

In the new order of things the percentage of managers and opera- 
tives, whose capital, as well as their brains and hands, is employed in 
a given business, is largely reduced, and there is a corresponding 
increase in the percentage of those whose only interest in the business 
is their daily, weekly or monthly wage allowance. 

This company attempts to give its employees a share 
in the capital by selling them stock on contracts to pay for 
the shares $i each month. In the report used 1,000 con- 
tracts for 8,400 shares are mentioned. This scheme is called 
"profit sharing." There is an elaborate plan of insurance 
and old-age pensions. At each mine a "lodge" is organized, 
but membership is voluntary. The dues are 40 cents per 
month. The benefits are: (i) in case of fatal accident 
while at work, $150, of which the company pays one-half; 
(2) in case of death from natural causes, $100, paid alto- 
gether by the employees; (3) in case of death of wife, or 
parent, if dependent on employee, a funeral benefit of $75, 
all paid by employees; (4) in case of death of children 
of employees, if over two and under twelve years, funeral 
benefit of $25, paid by employees; (5) in case of a non- 
fatal accident of a serious nature, $10 per week, one-half 

1 Fifteenth Quarterly Report, October, 1904. 



194 INDUSTRIAL INSURANCE 

paid by the company; (6) in case of a non-fatal accident 
of a less serious nature, $7.50 per week, one-third paid by 
the company; (7) in case of a minor accident, $5 per week 
paid by employees. The company has a pension fund, to 
which it made an original contribution of $10,000. Its 
growth and maintenance is provided for by monthly dues 
of employees, two cents of the forty being set aside for the 
pension fund, the company adding one cent. The fund is 
invested in preferred stock of the company and must remain 
intact for ten years. At the end of that period principal 
and interest in excess of $100,000 may be used in the pay- 
ment of pensions to men who have contributed to the fund 
for ten years, and who, through age, accident, or disease 
are not able to earn their livelihood. All expenses of the 
association are paid by the company. About 20,000 mem- 
bers are in the lodges and about 60,000 persons are pro- 
tected. Up to April 30, 1905, the total benefits paid had 
been $202,770.62; the number of men paying premiums 
into the fund, 21,909. The pension fund on April 30, 1905, 
was $35,410.44, of which the company had contributed 
$14,945.95. 

Metropolitan Street Railway Association, New York. 
Membership is limited to employees of the company and 
entrance is voluntary for employees between twenty-one 
and forty-five years of age. The monthly dues, 50 cents, 
are deducted from the pay-roll ; the assessments of 50 cents 
in a month, but not more than $3 in one year, may be levied 
to replenish the treasury. There is an initiation fee of $i 
and a fee for the medical examination. New members sign 
a contract authorizing the deduction of premiums from the 
pay-roll. The benefit paid in case of disability due to acci- 
dent or sickness is $i per day, after seven days, but not 
longer than ninety days and not over $90 in all. If the 
disability is due to vice, nothing is paid. The death benefit 



FIRMS AND CORPORATIONS 195 

is $300. The company has a pension department whose 
scheme went into effect July i, 1902. This department is 
administered entirely by representatives of the company. 
Pensions are paid to all employees who have reached the 
age of seventy years, and to employees on attaining sixty- 
five years who, after twenty-five years of service with this 
company, have been disabled. Only employees receiving 
less than $1,200 yearly wages are admitted. Pensioners 
must belong to the association. The pension rates are 
as follows : after thirty-five years of continuous service, 
40 per cent, of the average wages of the ten years preced- 
ing retirement; service thirty to thirty-five years, 30 per 
cent, of average - wages ; twenty-five to thirty years of 
service, twenty-five per cent. ; the same rates are paid to 
those retiring disabled at sixty-five to sixty-nine years of 
age. If payments at these rates require more than $50,- 
ooo annually they will be scaled down pro rata. Pen- 
sions are payable monthly. No assignment of pensions is 
permitted, and the pension is regarded as a gratuity, there 
being no legal claim for it. 

The employees of the Crane Co., Chicago, were organ- 
ized into a voluntary relief association in 1893. The regu- 
lations of that association show a classification of dues 
and benefits based on wages. Members whose wages are 
$4 per week pay 10 cents a month and receive in case of 
disability $2 per week, and in case of death a burial benefit 
of $25 is paid; wages $6 per week, dues 25 cents a month, 
benefits $4 per week and burial benefit $50; wages $9 per 
week, dues 30 cents, benefits $8 per week, death benefit $75 ; 
wages $12, dues 40 cents, benefits $8, death benefit $100; 
wages $15, dues 50 cents, benefits $10, death benefit $125; 
wages $18, dues 60 cents, benefits $12, death benefit $150. 
Assessments are levied at each death. Where the disability 
is due to vice, benefits are refused. This company estab- 



196 INDUSTRIAL INSURANCE 

lished, April i, 1904, a plan for pension and relief, which is 
a combination of accident, invalidism, and old-age insur- 
ance, without legal claim, without payments from the 
employees, a pure gratuity of the company, though demand- 
ing faithful service as a condition of enjoying benefits. 

The Macy Mutual Aid Association of employees of R. 
H. Macy & Co., New York, was organized in 1885. The 
directors are appointed by the company. Membership in 
the association is a condition of employment and member- 
ship ceases with employment. The monthly dues are taken 
out of the pay-roll. After five days of illness the employee 
is entitled to receive benefits not more than eight weeks 
in one year. Members cannot claim benefits until the expira- 
tion of twelve months from the last payment of the eighth 
benefit paid. 

Hibbard, Spencer, Bartlett & Co., wholesale hardware 
merchants, Chicago. The employees of this firm have 
enjoyed the advantages of a benevolent association since 
March 5, 1888, and quite a number of trusted men have 
been permitted to buy stock of the corporation. The dues 
of the association are ten cents a month, although some 
members pay $3 a year. The association had one hundred 
members at the beginning and has grown to have six hun- 
dred members. Membership is voluntary. The firm does 
not agree to help the association, but in fact it has made 
contributions when needed. During the first seventeen years 
of its existence the association collected about $12,000 and 
paid out about $11,400, chiefly in sick benefits, one-half of 
this for the families of members. There are no expenses 
of administration, the officers caring for the fund without 
salaries. On January i, 1905, this firm established an old- 
age pension fund for the employees. The plan was first 
proposed to the employees before adoption and was approved 
by 95 P er cent - of them. The control of the fund is in the 



FIRMS AND CORPORATIONS 197 

hands of the firm. Membership is required of all employees 
over eighteen years of age, with the exception of stock- 
holders and traveling salesmen. The contributions are 2 
per cent, of the salary of each employee, deducted quarterly 
from the salary. The corporation pays into the fund an 
amount equal to that contributed by the employees. The 
ordinary pension is equal to one-half the average salary of 
the pensioner during the five years preceding his retirement 
or disability. If an employee is discharged or leaves the 
firm, the amount of his contributions, together with interest 
at 3 per cent., is returned to him. If an employee remains 
and becomes a pensioner and does not remain long enough 
on the pension roll to draw a sum equal to the aggregate 
of his contributions, together with 3 per cent, interest, the 
excess is paid to his heirs. The report for the first year, 
rendered January 25, 1906, showed receipts from employees, 
$10,306.79, and the same amount from the firm; with 
interest, $190.07. The disbursements were: withdrawn by 
retiring employees, $841.90; pensions, $302; balance, Janu- 
ary i, 1906, $19,659.75. 

The Western Electric Co. employs many thousands of 
workmen. In March, 1906, it created a pension system. 
The sum of $400,000 is set aside as a fund. Any unused 
part of this fund draws interest from the company at the 
rate of 4 per cent, per annum. The president is authorized 
to add $150,000 annually to the fund. If the allowances 
exceed the income a new rate will be established which will 
proportionately reduce all allowances. The fund is man- 
aged by representatives of the company. All employees 
of the company who have reached the age of sixty years 
and have been twenty years continuously in the service of 
the company may be retired on pension. Any employee 
who has been ten years in the service, and has become totally 
incapacitated by injury or sickness, may receive a pension. 



198 INDUSTRIAL INSURANCE 

The annual pension allowance for each employee retired 
for age shall be : for each year of active service i per cent, 
of the average annual pay during the ten years next pre- 
ceding retirement. Pensions are paid monthly till death, 
and may be granted to widows and orphans one year longer. 
The amount of pension for age will depend on two condi- 
tions: the number of years the person has been in active 
service, and the amount of his average wages per year for 
the ten years next preceding retirement. For example: If 
the average pay per year for the last ten years of an em- 
ployee's active service should equal $900, and if the service 
has been continuous for twenty-four years, then the pen- 
sion would be twenty-four per cent, of $900, or $216 per 
year, or $18 per month. The amount and duration of 
pension for disability is determined by the pension board 
for each case. 

The Gorham Manufacturing Co., of Providence, R. I., 
on May i, 1903, adopted a pension plan, "believing that it 
is the duty of every corporation which has been in existence 
for 50 years to provide for those whose terms of service 
have covered the greater portion of their active life." Ac- 
cording to a circular of the company, employees whose 
records are satisfactory to the company will, if disqualified 
for work on account of age or permanent ill health, be 
eligible to pensions under the following age limits and terms 
of service : at seventy years, after twenty-five years of con- 
tinuous service, at sixty-five years of age, after thirty-five 
years of service; at sixty years of age, after forty years of 
continuous service. When the company is satisfied that an 
employee is entitled to a pension he is to receive a monthly 
sum equal to i per cent, for each year's active service, com- 
puted at the wage paid at the time of enrolment, although 
no pension can exceed $1,000 per year. The fund is main- 
tained by setting aside a sum equal to i per cent, of the 



FIRMS AND CORPORATIONS 



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202 INDUSTRIAL INSURANCE 

amount paid for labor during the preceding year, and out 
of this fund pensions are to be paid. When the amount 
paid out for pensions during three consecutive years shall 
exceed by 5 per cent, the appropriations under the foregoing 
provision, all outstanding pensions shall be scaled down to 
come within the average of the three years' appropriation 
and a new schedule adopted for future pensions. If such 
reduction of pensions becomes necessary, the original rates 
on outstanding pensions and the original schedule will be 
resumed whenever the appropriation for three consecutive 
years shall exceed by 5 per cent, the amount paid for 
pensions. 

The firm of G. B. Carpenter & Co., merchants of Chi- 
cago, employing about 200 persons, pays about $4,000 a 
year in sickness and accident benefits and old-age pensions. 
It has no regular system or association, and prefers to keep 
entire control. 

The Metropolitan Life Insurance Co. Staff Savings 
Fund, New York City, was organized in 1904. The com- 
pany has complete control of the administration of this 
fund, which is maintained from contributions of employer 
and employees and from interest on deposited sums. The 
company contributes 50 per cent, of the amounts paid by 
the employees. In case an employee on account of age or 
infirmity retires from the employment he may receive his 
share with interest at 5-9 per cent. In case of death the 
heirs receive the sum to his credit and interest. If an 
employee leaves the service for other reasons he receives all 
that he has himself paid in, with interest, without claim on 
contributions of the company. 

The schemes of Mr. Alfred Dolge have often been 
described and must continue to attract attention as experi- 
ments, the very errors being instructive for future experi- 
ment. The firm of Alfred Dolge & Son, at Dolgeville, 



FIRMS AND CORPORATIONS 203 

N. Y., a town of 2,000 inhabitants, employed about six 
hundred persons in the manufacture of pianos, organs, and 
various materials used in such manufactures. The firm 
carried about $200,000 life insurance at a very moderate 
rate, for employees who had remained witti them five 
years. The firm paid the premiums. If the employee 
left the firm he might retain his policy by paying the 
premiums. An employee might acquire an insurance at the 
age of twenty-six years for $1,000 and for each term 
of five years of service $1,000 until he had $10,000 insur- 
ance. Those who entered the service of the firm between 
twenty-two and twenty-six years of age could acquire only 
$2,000. Those who began between twenty-seven and forty 
could have only $1,000. For those above these ages and 
for all who could not be insured the firm set aside $35 per 
year until $1,000 stood to their credit; or if they died before 
this sum was credited, the heirs received the amount placed 
to their credit on the books. The firm also agreed to pay 
pensions for the aged and disabled, varying in amount from 
one-half to all the wages during the preceding year before 
the disability began. The amount of the pension was partly 
determined by the period of service, from ten to twenty-five 
years, but it might not in any case exceed $1,000. Very 
few remained long enough in the service to gain right to a 
pension. 2 

Since the scheme was advertised far and wide Mr. 
Dolge severed his connection with the firm and started 
in business in California. From thence he wrote to the 
writer December 12, 1906, to the effect that his scheme of 
insurance which he had conducted for twenty-five years 
had been abandoned by his successors. He also called 

2 Article of E. W. Bemis in Handwoerterbuch der Staatswissen- 
schaften, 1898, Bd. I, p. 714; article of Paul Monroe, American Journal of 
Sociology, January, 1897; A. Dolge, Economic Theories as Practically 
Applied in the Factories, 1896. 



204 INDUSTRIAL INSURANCE 

attention to the fact that already in 1895 he had shown the 
inherent weakness of all such individual enterprises un- 
supported by law, and had recommended a national system 
of industrial insurance so that workmen in moving from 
one state to another, according to the changing demands for 
labor, might not be deprived of the advantages of insurance. 
He declares that his own experience had deepened this 
conviction and he was glad to learn that the state of Illinois 
was considering a law for the promotion of this object. 

The benefit association of the Buffalo Smelting Works 
was established in 1893. The dues of the married members 
are $i and of the unmarried 50 cents monthly. These dues 
are subtracted from the wage payments and used only for 
relief in case of disability. The contributions of the 
firm are expended solely on death benefits. The sickness 
benefits are $25 monthly, after five days, and accident 
indemnity is the same. There are 250 employees and mem- 
bership in the association is voluntary. The same firm has 
a similar organization in their mines. The funds are in- 
vested in the stocks of the company and the interest is used 
to pay premiums. 3 

The New York Edison Company pays the wages of 
injured workmen, during disability, about $10,000 annually. 4 

Steinway & Sons, New York, have had in their estab- 
lishment a benefit association since 1864, and in 1883 a new 
association was formed, which has a membership of eight 
hundred and fifty. The firm contributes annually to the 
fund $1,000, pays $1,200 for three beds in a hospital, and 
pays for medical treatment. Every employee who is over 
eighteen years of age must become a member of the associa- 
tion within three months after being employed; later he 

8 Report, New York Department of Labor, 1903, p. 231. 
*Ibid., p. 283. 



FIRMS AND CORPORATIONS 205 

cannot become a member. The entrance fee is $1.00 and 
the monthly dues 1 5 cents. 5 

The Oneida Community has an association and all em- 
ployees must be members. The weekly dues are 5 cents, in 
some cases 10 cents; the community contributes to the fund 
50 per cent, of the dues. The sickness benefits are 50 cents 
or $i daily, during thirteen weeks, and afterward half 
this amount for thirteen weeks. 6 

Rochester Railway Co. has seven hundred employees, of 
whom four hundred and fifty are members of the benefit 
society. Employees between twenty-one and fifty years of 
age can become members of the association after a medical 
examination. The entrance fee is $1.00; monthly dues, 
50 cents; disability benefit, $1.00 per day, for 100 days in 
one year; death benefit, Si5o. 7 

Bausch & Lomb Optical Company, Rochester, N. Y. 
The firm gave $3,000 as a foundation for the fund. All 
employees between twenty and forty-five years of age, after 
they have been employed by the firm for two months, may 
become members of the society. The monthly dues vary 
according to the rate of wages from 5 to 50 cents, accord- 
ing as the wages are from $3 to $12 weekly; the death 
benefit is $15 to $100; the sickness benefit from $i to 
$8 weekly. The pension fund has reached $20,000, and 
out of the interest on this fund the firm pays to superan- 
nuated employees pensions graded in amount according to 
former wages and period of service. 8 

The International Harvester Company, Chicago, has in 
preparation an insurance plan for their 20,000 to 25,000 
employees in all the affiliated branches of their establish- 
ments. 9 

6 Ibid., p. 291. 7 Ibid., p. 315. 

6 Ibid., p. 297. *Ibid., p. 302. 

9 This important scheme is printed in full in Appendix H. 



206 



INDUSTRIAL INSURANCE 



The Swift Packing Co., Chicago, has branches in Kansas 
City, South Omaha, East St. Louis, South St. Joseph, South 

TABLE II 
SWIFT & COMPANY EMPLOYEES BENEFIT ASSOCIATION. SCHEDULE OF 

CONTRIBUTIONS FOR MEMBERS UNDER 45 YEARS OF AGE 
M embers 45 years of age and over may enter on this schedule if they have been 
in the employ of Swift & Co. continuously from December 31, 1906, to 
date of entry, and avail themselves of this privilege on or before Decem- 
ber 31, 1907. 







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$0.15 


$ 3- 


$ 200.00 


$ 400.00 


$ 800.00 




2 


. 20 


3.00 


400 . oo 


400.00 


800.00 


$13 . 50 and under . . 


3 


3 


4-5 


OOO.OO 


600.00 


1,200.00 




4 


3 


6.00 


400 . oo 


400 . oo 


800.00 




5 


.40 


6.00 


800.00 


800.00 


1,600.00 


Over $13 . 50 and not 














over $18 oo 


6 


KQ 


Q.OO 


800 . oo 


800 . oo 


1,600.00 


Over $18.00 and not 






7 








over $30 oo 


7 


.71; 


13.50 


1,200.00 


1,200.00 


2,400.00 


Over $30 oo 


/ 
8 


/ O 
I.OO 


18.00 


1,600.00 


1,600.00 


3,200.00 














o> 



Additional death benefits (as allowed by rules), 5 c. per week for each 
$200.00. 

Members who have left the service and contribute for death benefit only 
5 c. per week for each $200.00. 

Weekly accident benefit for 104 weeks and reasonable bill for surgical 
attention. 

Weekly sick benefit, after the first 6 working days, for 52 weeks and half- 
weekly benefit for additional 52 weeks. 

SCHEDULE OF CONTRIBUTIONS FOR MEMBERS 45 YEARS OF AGE AND OVER 
AS FOLLOWS: 

Members joining between the ages of 45 and 50 years, one and one-half 
times above contributions. 

Members joining between the ages of 50 and 55 years, one and four-fifths 
times above contributions. 

Members joining between the ages of 55 and 60 years, two and three- 
tenths times above contributions. 



FIRMS AND CORPORATIONS 207 

St. Paul and Fort Worth, with about 400 warehouses and 
offices in the United States. For their 25,000 employees 
(sometimes more and sometimes less) this firm has worked 
out a plan of benefits which has many liberal features. In 
August, 1908, the membership was over 11,500. 

The rules of the Swift & Co. Employees Benefit Asso- 
ciation went into effect July I, 1907. The object is to 
provide payments of definite amounts to such employees as 
contribute to the fund in case of disability or to their 
relatives in the event of death. The company agrees to pay 
operating expenses and to make good deficiency in funds 
to meet obligations. The advisory committee, which has 
general supervision, is composed of seven members chosen 
by the company and seven others elected by the members. 
The company pays the wages and expenses of travel of 
members of the committee. Medical examiners prepare 
applications, report on the condition of sick or injured 
members, decide when members are disabled and when they 
are ready to work, and certify bills for surgical treatment. 
Disability is defined as physical inability to work by reason 
of sickness or accidental injury. The contributions and 
benefits are shown in the table. Membership is voluntary 
and no provision is made for securing a release from legal 
liability. 

The plan of the United Traction and Electric Co., 
worked out with the aid of the well-known actuary, Mr. M. 
M. Dawson, has the highest value for those who wish to 
draw up articles of a similar kind. The report of the asso- 
ciation for 1905 showed receipts of the fund of $30,226.97; 
of which the employees contributed $14,942.40 and the 
company $12,831.12. The expenditures for death benefits 
were $9,875; for sick benefits $19,744.59. Since the 
organization the members have paid in $60,984.30 and the 
company $42,846.10. The costs of administration are met 



208 INDUSTRIAL INSURANCE 

by the company and are not counted in reports of expendi- 
tures. 

The object of the association is to afford aid and relief 
to sick and disabled members, and to the widows and 
children of deceased members. Membership is limited to 
employees of the company. The directors are persons 
appointed by the company and others elected by the mem- 
bers by ballot. The contributions are in proportion to 
wages: 10, 15, or 20 cents each week; the members being 
divided into three wage classes, according to their earnings. 
These cover those earning less than $9 per week, $9 to $12 
per week, or over $12 per week. The death ^benefits are 
$500, $750, or $1,000, according to class. In case of dis- 
ability the weekly benefits are $4, $6, or $8. Disability is 
defined "as total incapacity to carry on any gainful occupa- 
tion." There is a provision looking to payment of partial 
benefits for partial disability. The company agrees to pay 
(i) one-fifth of each death benefit; (2) one- fourth of the 
amount of contributions by the members, payable weekly; 
(3) sums to cover expenses of management, adjustment, 
and litigation of claims; (4) sums to cover deficiencies, to 
be repaid if there is a surplus. The release clause is 
significant : "No benefit either for death or disability shall 
be payable except upon a receipt which shall contain a 
release in proper form .... from all liability to the 
beneficiaries. 

The Standard Oil Co. "It has aimed to secure the 
contentment of its employees by liberal and considerate 
treatment allied with a pension system, assuring a compe- 
tency for waning years. About 65,000 employees are or 
may become eligible for this pension, and no less than 
500,000 men, women, and children are directly or indirectly 
interested in the preservation of the company." 10 

"Statement of Mr. John D. Archbold, vice-president of the Standard 
Oil Co., in Saturday Evening Post, December 7, 1907, p. 32. 



FIRMS AND CORPORATIONS 209 

Mr. Francis H. MacLean has recently published the 
results of a study of insurance schemes in New York City. 11 

Self-insurance against accidents by larger companies is not an 

unknown thing in New York City It cannot be said that they 

have been introduced into many companies. Quite a numbef of com- 
panies do provide hospital care. A smaller group have combined sick 
and accident benefit systems which are sometimes wholly, sometimes 
partly, supported by the companies themselves 

The American Manufacturing Co., with factories in St. Louis, 
Mo., and in New York City, has a system which has been in use for 
many years and was introduced by the vice-president of the company. 
It provides for half-time wages in case of either sickness or accident. 
It includes, of course, immediate medical attention. In case of per- 
manent disability the loss of wage-earning power is estimated and a 
special trust fund set aside from which the sufferer draws the income 
for life. The Greenpoint factory of this company is the largest 
factory from the point of view of number of employees in New York 
City. The number runs from 2,000 to 2,200, of whom about two- 
thirds are girls and women. There is a large number of minor acci- 
dents in this factory, and occasionally a serious one. The cost of the 
insurance system runs about ij^ per cent, of the weekly pay-roll. 
Insurance in a liability company would run about 1 of I per cent. Of 
course it must be remembered that the former covers sickness which 
would not be covered by the liability insurance. The vice-president 
was asked what, viewed solely from the business point of view, was 
the advantage in the costlier system. He answered without hesitation 
that the additional cost more than came back to the company through 
increased regularity in attendance. 

This company does not find that the payments of insur- 
ance is an unbearable burden which cripples it in competi- 
tion with companies in the same line which do not have such 
insurance schemes. Apparently the payment of insurance, 
in the judgment of the managers, is a good investment. 

In the same magazine (p. 1213) is a description of the 
accident insurance scheme of the New York Edison Com- 
pany. Mr. E. M. Atkin, chief of the claim department, says 

11 Charities and the Commons, December 7, 1907, pp. 1207 ff. 



210 INDUSTRIAL INSURANCE 

that the former policy of insuring with employers* liability 
companies was abandoned as unsatisfactory, and, since May 
i, 1905, the Edison Company has handled the problem at 
first-hand. Free medical care is given in case of injury and 
the workman is requested to sign a release of all legal claims. 
If the accident is due to negligence of the company or any 
agent, full wages are paid during disability. If the accident 
is due to the negligence of the workman he may receive one- 
quarter or one-half wages during disability. In case of 
fatal accident, the funeral expenses are paid, and a donation 
made to the family. The company has had about 3,000 
accidents since the system was adopted and only five men 
have sued the company. The costs of litigation being saved, 
the money is available for benefits to the injured men or 
their families. The system of records of the causes of 
accidents enables the company to apply preventive and pro- 
tective measures by which the number of accidents is 
reduced. 

The illustrations given in this chapter show that the 
business world in the United States is not in sight of a 
consistent social policy in relation to industrial insurance, 
that employers are filled with vague dissatisfaction and are 
making what they call "practical" experiments, the most 
costly and unsatisfactory of all. Gradually the influence of 
actuaries is making itself felt with advantage, but they have 
only traditional standards to guide them. Perhaps the form- 
ulation of a broad and well-adjusted social policy will grow 
out of the labors of the society established for the study of 
labor legislation; and the attempts of Massachusetts, New 
York, Illinois, Wisconsin, and other states to introduce some 
form of compensation will help to clarify the views of men 
and formulate their ideas of what is fair and practicable. 
The suggestions of a state commission are more apt to be 
free from the bias of narrow interests than schemes invented 



FIRMS AND CORPORATIONS 211 

simply to escape legal burdens and responsibilities without 
giving an equivalent. One thing seems quite certain; the 
agitation, discussion, and experimentation of the past few 
years are bearing fruit and we are moving more rapidly 
than in any previous time toward a sound basis of agree- 
ment. 



CHAPTER VIII 
INSURANCE PLANS OF RAILWAY CORPORATIONS 

Even if afterward we give separate treatment to special 
branches of the insurance of railway employees accident, 
sickness, death benefits, pensions, and superannuation it 
seems wise at first to treat each system as a whole. It is 
difficult to separate the items, and the companies themselves 
bring the various branches under a common scheme and 
administration, each part being understood only as it is 
considered in relation to all others. It is in this way that 
Riebenack goes to work in presenting the results of his 
valuable studies to which in this chapter we are so deeply 
indebted, although independent studies have been made with 
other sources, and some of the conclusions reached are 
different from his. 1 

According to official statements 2 there were in this coun- 
try, on June 30, 1902, 202,471.85 miles of railroads. In 
1892 there were only 171,563.52 miles. The number of 
"steam-railroad employees" reported by the census of 1900 
was 461,909 males, 149,230 females; total, 611,139. Riebe- 
nack gives the mileage for 1903 as 205,000 and the em- 

1 See Railway Provident Institutions in English-Speaking Countries, 
by M. Riebenack, comptroller of the Pennsylvania Railroad Company 
(Philadelphia, 1905) ; pp. 31, 357, and index. The reports used by Mr. 
Riebenack are for the year 1903. Since his study was made many 
changes have been made in some of the companies. Materials are not 
easily accessible to bring details up to date, but some of the most 
important recent schemes are here added. 

"Statistical Abstract of the United States, 1903, pp. 403, 495. The 
Interstate Commerce Commission reports (July 9, 1908) that on June 
30, 1907, the total single-track railway mileage in the United States 
was 229,951.19 miles; the number of persons on pay-rolls, 1,672,074; 
wages and salaries, $1,072,386,427. 

212 



INSURANCE PLANS OF RAILWAY CORPORATIONS 213 

ployees as 1,312,537, but he includes persons of all classes 
who are engaged in this occupation. His own study covered 
railroads with a mileage of 73,35176 with their 653,267 
employees. This means 35.8 per cent, of total mileage and 
49.7 per cent, of employees. His work is based on returns 
from 140 railroad companies, 63 having made no response 
to requests for information. The volume contains much 
interesting information about other forms of "welfare 
work" with which we are not here concerned. 

A summarized statement of the results of this important 
study is thus given : 

The nine purely relief department roads hereinbefore discussed 
represent an aggregate of 31,000 miles of roadway, or about 15 per 
cent, of the total railway mileage of the United States, with employees 
numbering 318,000, or about 24 per cent, of the total number of rail- 
way employees in the country, and an insurance membership of 
206,000 employees, or practically 65 per cent, of the total number of 
employees identified with the service of the roads involved. The 
combined average annual disbursements of these departments aggre- 
gate about 2,230,000, while their combined disbursements, since organi- 
zation, approximate $37,iso,ooo. 3 

The railroad companies in the United States have made 
thus far the most important contribution to the promotion 
of industrial insurance. They are under the control of men 
who have large views and highest ability. Mr. Bryce says 
of these men : "these railroad kings are among the greatest 
men, perhaps I may say the greatest men in America." 4 The 
long life of these corporations is also favorable to large and 
permanent schemes of betterment, and if we add the enor- 
mous resources of the companies we may account for their 
leadership in this field. 

Hospital service. This is the most primitive form of 
relief. The necessity of having surgical and medical help 

3 Riebenack, op. cit., p. 77. 

4 The American Common-wealth, Vol. II, pp. 530-53, 2d ed. 



214 INDUSTRIAL INSURANCE 

at hand at all times was forced upon the attention of rail- 
roads at an early period. The first hospital department was 
established by the Southern Pacific Railroad in California 
in 1868, though before that time companies were obliged 
by circumstances to make arrangements for emergencies 
with physicians and private hospitals. Riebenack received 
reports from 35 railway companies with hospital organiza- 
tion, representing an aggregate of about 70,000 miles and 
360,000 employees, and treating annually over 275,000 
cases. Ten of these companies report that they make pay- 
ments for this service, either to their own hospitals or to 
others under contracts, out of purely railway revenue. The 
cost of hospital service to the Pennsylvania System during 
the year ending December 31, 1903, was $20,567.50. The 
rates paid by employees are from 25 cents to $1.00 per 
month. The company usually provides hospital buildings, 
free transportation, and occasionally supplies "operative 
deficiencies." The medical staff is organized under a chief 
surgeon or physician, with division and local surgeons and 
physicians distributed at convenient points along the lines 
or road, and a corps of hospital surgeons. Specialists are 
employed when desirable. Under these arrangements the 
fees paid are simply for medical services; in case of injury 
the damages are settled by agreement or litigation. Oc- 
casionally the members of families of members are received 
for treatment in the company hospitals at reduced rates. 
Some attention is given to providing first aid to the sick 
and injured by lectures from medical men to groups of 
employees and by placing packets of bandages, medicines, 
etc., at convenient points ready for use. 

Insurance in private companies. After hospital service 
the next step forward toward an adequate insurance system 
has been taken by those roads which secure favorable terms 
for life insurance with private companies. The railway 



INSURANCE PLANS OF RAILWAY CORPORATIONS 215 

companies, by the use of their authority as employers and 
by directions given to their clerical force, are able to save 
much of the cost of solicitation and collection of premiums. 
They are thus in a position to secure better terms than an 
individual employee could do, and their own contribution of 
collection, sometimes with a moderate subsidy, facilitates 
the process and diminishes the burden on the employees. 
Several forms of this experiment may be cited. 

In some cases the company merely arranges for a can- 
vass of solicitation by agents of the insurance companies. 
The Bangor and Aroostook Railroad Co., with its 412 
miles, and 1,320 employees, is in this group. The Illinois 
Central Railroad (4,301.10 miles, 34,249 employees) secured 
favorable rates from reliable accident insurance companies. 
The Norfolk and Western Railroad Co. (1,722 miles, 15,- 
394 employees) has a similar plan. The employees are 
classified according to the risk to which they are exposed 
from "select" to "special hazardous." The ordinary in- 
demnities are: "$500 death benefit or $2.50 weekly indem- 
nity, as a minimum, and $1,000 death benefit or $5 weekly 
allowance, as a maximum. Higher amounts may be insured 
in less hazardous classes. The company collects the prem- 
iums by deduction from the pay-roll. On February i, 1904, 
3,865 out of a/total of 15,394 employees held some insur- 
ance. 

Similar plans are those of the Texas and Pacific Railroad 
Co. The premiums range from $10.20 to $61.20 per 
annum; weekly indemnity, $5 to $25 per week; death 
benefit, $500 to $5,000, The railroad deducts premiums 
from the pay-roll and receives commission of 5 per cent. 
Out of 8,177 employees only 1,250 are insured. 5 The Cin- 
cinnati, New Orleans and Texas Pacific Railway Co., in 
addition to securing death benefits and accident indemnity, 

Riebenack, op. cit., p. 24. 



2i6 INDUSTRIAL INSURANCE 

also has sickness insurance covered by the same premium. 
Various forms of policy are offered. It is estimated that 
the private company is saved about 41 per cent, of the cost 
of business, since it has no expense for soliciting and collect- 
ing premiums; and hence it can give lower rates. The 
"health" insurance costs $6.00 per year for each $5.00 of 
weekly sick benefit applied for. At the close of 1903 only 
517 employees out of 5,338 were insured, and these carried 
$780,100 for death benefits and $7,097 for monthly in- 
demnity. The annual receipts, $12,633.48, were made up 
of $11,761.92 contributions of employees and $871.56 by 
the company. 

In some cases the company pays a part of the premium. 
Thus the Chicago and Alton Railroad (915 miles; 7,339 
employees) in 1899 made a contract with an insurance 
company for a life and accident policy, agreeing to pay 
one-half the premiums for the hazardous classes and 30 
per cent, for the non-hazardous. This plan seems to have 
been abandoned on the ground that the insurance company 
could not carry the risk at rates agreed. The Union Pacific 
Railroad (2,933.7 miles, 15,338 employees) on January i, 
1901, agreed to pay one-third the premiums of the hazard- 
ous and one-fourth of the premiums of the other classes. 

We find a different type of insurance where the railroad 
company itself conducts an accident-insurance business and 
in addition settles on an equitable basis for injuries which 
might fairly be supposed to involve legal liability. The 
Chicago and Eastern Illinois Railroad, in June, 1893, organ- 
ized a scheme for issuing policies securing benefit in case 
of accident or death. Persons over 65 years of age are 
debarred from participation, unless they have come to that 
age in the service of the company. The premiums paid are : 
for office men, station men, passenger conductors, tower 
men, and flag men, one-half of i per cent, of wages; freight- 



INSURANCE PLANS OF RAILWAY CORPORATIONS 217 

train men and switchmen, 2 per cent, of wages; all others, 
I per cent, of wages. The benefits are: for disability due 
to accident, one-half of usual wages not exceeding 50 
weeks, the total not more than $1,000; for death benefit, 
one-half of wages of one year with funeral expenses and 
physician's bill, not to exceed $100; deductions being made 
for previous payments on indemnities, the total not to ex- 
ceed $1000. The company gives free surgical attendance, 
makes good deficiencies in the fund, and administers the 
business, 6 The object is to provide sound accident insur-' 
ance at lowest cost. By reason of their employment, the 
hazard of accident resulting in personal injury is so great 
that the premiums charged by the ordinary casualty com- 
pany are almost prohibitive, and only a small percentage of 
the higher-priced railroad men can afford to pay these rates. 
The ordinary accident policy is "provided with so much red 
tape and contains so many conditions precedent that the 
collection of benefits is usually the result of some kind of 
compromise, so that the employee is practically without pro- 
tection, and without protection he usually becomes a charge 
on the company," says Mr. H. F. Jones, the administrator 
of the plan. At first the plan was optional, and the men 
could accept or decline membership. So many of the em- 
ployees availed themselves of the opportunity that to facili- 
tate the handling of matters pertaining to it, it was made 
compulsory in May, 1895, with all employees except those 
in non-hazardous branches of the service. The premiums 
are deducted from the pay-roll and the benefits are paid 
monthly as the wages are paid. The experience of the com- 
pany is that the scheme has reduced suits by employees to 
a minimum and given to the employees much more than 
they would have been paid if they had entered suit. By 
careful attention to preventive and first-aid devices and 

6 Riebenack, op. cit., p. 20. 



218 INDUSTRIAL INSURANCE 

prompt medical help the number of accidents and the dura- 
tion of disabilities have been considerably reduced. Gratui- 
tous contributions have ceased. After the first shock of 
the hurt abates the employee who is injured has a better 
feeling toward the company on account of the prompt and 
substantial indemnity paid. The plan is advantageous to 
all parties concerned. 

Philanthropic endowments. The one conspicuous ex- 
ample of this type is the Andrew Carnegie Fund. On 
March 12, 1901, Mr. Carnegie gave to the Carnegie Co., 
Pittsburgh, Pa., $4,000,000 in trust, the interest to be 
applied in providing relief for employees of the Carnegie 
Co. in all its works, mines, railways, shops, etc., and for 
those dependent upon employees who are killed; also 
to provide small pensions or aid to such employees as, after 
long and creditable service, need help in their old age. On 
December 31, 1903, the report mentioned 284 cases of acci- 
dent, 1 68 deaths, 189 pensioners. Total disbursements, 
$228,866.02. The Bessemer and Lake Erie Railroad Co. 
(207 miles, 2,676 employees) comes under this trust, the 
"Andrew Carnegie Relief Fund." Employees are not re- 
quired to contribute to the fund. The accident benefits are : 
75 cents per day for 52 weeks to an unmarried man, and 
one-half this rate afterward. Married men receive $i 
per day, with an additional benefit of 10 cents for each child 
under 16 years of age; one-half rates after 52 weeks. Death 
benefits: maximum payment, $1,200. Deficits in the fund 
are met by ratable reductions in the allowances. Total 
disbursements amount to $9,168.75; accident benefits to 
$4,788.75; death benefits to $4,38o. 7 Some visitors in 
the region where the fund is administered have the con- 
viction that the fund is somewhat abused by malingerers. 

Still another type is that of mutual insurance associa- 

7 Riebenack, op. cit., p. 30. 



INSURANCE PLANS OF RAILWAY CORPORATIONS 219 

tions of employees. The employees of the Ann Arbor Rail- 
road Co. (291.9 miles, 1,563 employees) in 1899 formed 
an association for mutual insurance. The company itself 
assumes no responsibility. The membership in 1903 was 
850 (out of a total of 1,563). The premiums are graded 
according to the hazard of occupation. The minimum 
premium for station agents and clerks is 25 cents per month, 
with a weekly indemnity of $5 and a death benefit of $1,000. 
The maximum premiums and allowances are: for firemen 
and engineers, $1.62 per month assessments, weekly in- 
demnity $10, death benefit, $2,000; for freight brakemen 
and switchmen, $1.74 monthly assessments, $7 weekly in- 
demnity, $700 death benefit. The premiums and indem- 
nities of the sick fund are : a premium of 35 cents per month 
gives a weekly indemnity of $5 ; 50 cents gives a weekly 
indemnity of $7.50; 70 cents gives $10. A funeral benefit 
of $100 in case of death from causes other than accident 
is paid. Premiums are deducted from the monthly pay-roll 
The receipts during the year 1903 were $11,686.20. 

The employees of the Cincinnati, Hamilton and Dayton 
Railroad Co. (1015.09 miles, 5,449 employees) organized 
an association in 1876, which has a membership of 1,610. 
There are two classes of members : those who pay $i assess- 
ment on the death of a member and receive a death benefit 
of $500; and the other who pay $2 and receive $1,000. 
Accident benefits are $5 per week in case of injury in Class 
A, while in Class B a benefit of $1,000 is paid for loss of 
both legs, both eyes, both arms, or one leg and one arm. 
The average annual mortality has been 12.4 per thousand. 

Regular relief departments. These organizations rep- 
resent the most complete methods of sickness and accident 
insurance known in the United States. The old-age and 
disability pension schemes will be considered separately. 
The employees of the Baltimore and Ohio Railroad Co. took 



22O 



INDUSTRIAL INSURANCE 



the initiative in insurance schemes with their relief organi- 
zation on May i, 1880. This was practically a mutual 
insurance association. But the first railroad corporation 
to organize a relief department of its own, according to 
Riebenack, was the Pennsylvania Co., on February 15, 1886. 
The Baltimore and Ohio' Co. established its relief depart- 
ment April i, 1889. These schemes have served as models 
for others. 

We take the Pennsylvania Railway Relief Department 
as a typical example for detailed description, and it will not 

TABLE i 







LINES EAST 






LINES WESI 


c 


CLASS 


Workmen 


Members 


Percentage 
of 
Members 


Workmen 


Members 


Percentage 
of 
Members 


Officials etc 


24 OQ'? 


it 8^3 


66 


7 088 


44^6 


<;6 


Telegraphers 
Conductors 


2,702 
1 606 


1,878 

2 060 


70 
82 


1,340 
I 508 


985 
I 3Q4 


74 
Q2 


Brakemen 


O7 UW 

17 OO7 


II 3^2 


87 


-3 213 


? Q27 


O4 


Engineers 


4, 4.8 2 


3 487 


78 


2 198 


2 062 


O4 


Firemen 


4,770 


4 38l 


02 


2 328 


2 260 


O7 


Switchmen 


4,180 


*wj 

3,6^7 


87 


ztie 


3,018 


86 


Machinists 


27,642 


18,000 


60 


10x87 


8,804 


84 


Station agents 


24,74^ 


13,301 


CA 


* w 3;: 

7,^86 


I 008 


2C 


Irregular workmen . 


I,OOI 


679 


68 








Total 


IIO 3.27 


76 ^07 


60 


40 26"? 


27 084 


7O 

















be necessary to give so much space to others formed on the 
same pattern though differing in some particulars. The 
Pennsylvania system east and west of Pittsburgh has 10,- 
913.89 miles and 172,024 employees; east, 5,852.44 miles, 
117,928 employees; west, 5,061.45 miles, 54,096 employees. 
Branch lines are included in the system. From the year 
1874 the employees had urged the management to consider 
the subject, but only in 1886 (February 15) was a plan 
organized under the title, "The Pennsylvania Railroad Vol- 
untary Relief Department." This was the first absolutely 



INSURANCE PLANS OF RAILWAY CORPORATIONS 221 



independent relief organization in the United States for 
railroad employees. The relief department for lines west 
of Pittsburgh was established July i, 1889. Both plans are 
on essentially the same basis and may be described together. 
The object is to provide definite benefits to members disabled 
by accident or sickness, or to their dependent relatives in 
case of death. 8 

The contributions of the company. The railroad cor- 
poration guarantees the fulfilment of the obligations as- 
sumed, takes charge of funds, is responsible for their safe 
keeping, supplies facilities, and pays expenses of adminis- 
tration (including salaries of officers, medical examiners, 
clerical force), pays interest on monthly balances, and 

TABLE II 



Class 


Lines East 
Monthly Earnings 


Lines West 
Monthly Earnings 


Monthly Payments 


, I 
II.. 


Less than $35 

$"? ? to S^ ? 


Not over $40 
$40 to $60 


$0.75 
I c;o 


Ill 
IV.. 


SP^i L(J MP^O 

55 to 75 

7 e to Q C 


60 to 80 
80 to 100 


2.25 
300 


V.. 


Qt upwards 


Over $100 


z 7C 











approves securities of investments. The company admin- 
isters by a superintendent with assistants. The general 
supervision is vested in an advisory committee, seven of 
whose members are elected by members. 

Membership. All classes of employees are eligible. The 
maximum age for entrance to the service of the company 
is 35 years, except where professional qualifications are 
required. The employee forwards his application for mem- 
bership to the relief department and, after medical exam- 
ination, signs a form of contract. Any employee under 45 
years of age may become a member if he passes a satis- 
factory medical examination. The total membership on 

8 Riebenack, op. cit., pp. 60-72. 



222 



INDUSTRIAL INSURANCE 



December 31, 1903, was 104,151, out of 172,024 employees. 
Table I shows the membership by classes. 

Membership payments are fixed and uniform without 
reference to occupation, and differences are based on wage 
classification, as will be seen in Table II. 

An employee is permitted to change from one class to 
another within certain defined limits. 

The company occasionally, in meritorious cases, extends 
the relief beyond 52 weeks out of its own funds as a gratu- 
ity. Funeral expenses are paid out of death benefits. The 

TABLE III 
SHOWING BENEFITS ACCORDING TO CLASSES 





ist Class 


ad Class 


3d Class 


4th Class 


5th Class 


Accident 
Daily indemnity up to 52 
weeks 


$O. CO 


$1 . OO 


$1 CO 


$2 OO 


$2 CO 


After 52 weeks 


O. 2C 


O. CO 


O 7C 


I OO 


I 2C 


Sickness 
Up to 52 weeks, after 3 days 
After 5 2 weeks 


0.40 
O. 2O 


0.8o 
o. 40 


I. 2O 

o. 60 


1. 60 

0.80 


2.OO 
I OO 


Death benefit 


$2CO 


$coo 


$7 Co 


$1,000 


$1,250 















average annual mortality rate per thousand members has 
been 12.6 (east) and 12 (west). 

The income of the relief fund is from these sources : 
membership contributions; company appropriations, when 
necessary, to make up triennial operative deficits; income 
and profit arising from investment of money on hand ; gifts 
and legacies; free use of buildings, transportation, and 
other facilities supplied by the company for conducting the 
department business; relief from all operating expenses 
which are borne by the company. In the event of a surplus, 
at the end of any three-year period of operation, after allow- 
ing for liability incurred and not paid, such surplus is 
devoted exclusively to promote a fund for the benefit of 



INSURANCE PLANS OF RAILWAY CORPORATIONS 223 

superannuated members, or in some other manner for the 
sole benefit of members of the relief fund. 

The total receipts since the establishment of the depart- 
ment have been $19,950,940.94, made up as follows: 

LINES EAST OF PITTSBURGH 

From membership $11,672,717.39 

From the Company 2,544,348.1 1 

From other sources 422,027.04 



Total receipts east of Pittsburgh $14,639,092.54 

LINES WEST OF PITTSBURGH 

From membership $ 4,342,321.95 

From the Company $ 969,526.45 



Total receipts west of Pittsburgh $ 5,311,848.40 

Aggregate receipts of Pennsylvania System. . .$19,950,940.94 

The average receipts per annum for lines east of Pitts- 
burgh, $813,282.91; and for lines west of Pittsburgh, 
$404,554.73, or a total each year of $1,217,837.64. 

The total disbursements since the establishment of these 
funds have been : 

LINES EAST OF PITTSBURGH 

For accident $ 2,246,454.10 

For sickness 4,455,618.80 

For death 4,851,434.88 

For operating expenses 1,815,641.54 

For superannuation allowances 148,662.15 



Total $13,517,811.47 

LINES WEST OF PITTSBURGH 

For accident $ 1,162,281.65 

For sickness 1,473,124.60 

For death 1,687,241.22 

For operating expenses 754,607.81 



Total $ 5,077,255.28 

Total disbursements of entire system $18,595,066.75 



224 INDUSTRIAL INSURANCE 

The average disbursements per year, for lines east of 
Pittsburgh, have been $750,989.53, and for lines west of 
Pittsburgh $381,260.40, or an aggregate of $1,132,249.93 
for the entire system. 

The advantages claimed for the relief department over 
the older conditions are : Indemnity is provided in case of 
disablement from accident or sickness and death from 
accident or natural causes, at minimum cost. The cost of 
insurance in regular companies is ordinarily prohibitive 
for those in hazardous branches of railroad employment. 
Free surgical attendance is furnished in case of injury 
received during the performance of work for the company, 
and artificial limbs are supplied and other similar articles 
needed by injured persons. There is no fee for entrance 
nor for medical examination, nor any special dues, taxes, or 
assessments. The member is exempt from paying dues 
during disablement except for the month in which the injury 
occurred. There is no danger of forfeiting insurance from 
non-payment of dues, since these are collected from the 
pay-roll so long as the member is at work. All expenses of 
administration are paid by the company, so that contribu- 
tions are devoted entirely to payment of benefits. Death 
benefits cannot be taken for debt, payments being made only 
to designated beneficiaries. Neither employees nor employ- 
ers are troubled by subscription solicitors for disabled men, 
as was the case before this plan went into effect. 

A surplus fund from the relief department east of Pitts- 
burgh accumulated since 1886 amounted to $751,256.25, 
the interest on which is devoted to superannuation 
allowances. From this fund 1,408 retired members have 
received $148,672.23; the expenditures in 1903 were $43,- 
875.12. On lines west of Pittsburgh no surplus has been 
accumulated, and so no superannuation payments have been 
made. Of pension schemes mention will be made later. 



INSURANCE PLANS OF RAILWAY CORPORATIONS 225 



The Baltimore and Ohio Railroad system. This com- 
pany, with its 4,410 miles of way and 55,688 employees, 
was one of the first to organize insurance for its employees. 
An association was formed May i, 1880, and the com- 
pany itself established a relief department March 15, 
1889. Out of 20,606 members of the old association 
19,467 joined the new department. The company annually 
gives $6,000 to the relief fund, or, when it is not needed 
there, to the pension fund. It contributes $10,000 annually 
for medical examinations; provides office room and furni- 
ture; gives the services of officers in administration; is 

TABLE IV 





MONTHLY DUES 


DAILY BENEFITS 


DEATH BENEFITS 


WAGE CLASS 






Accidents 






Sickness 




i Div. 


2 Div. 


26 Wks. 


After 


Sickness 


Accident 


Ordinary 


Max. 


A, up to $35 ... 


$I.OO 


$0.75 


$0.50 


$0.25 


$0.50 


$ 5 


$ 250 


$1,250 


B, $35 to $50. . . 


2.OO 


1.50 


I.OO 


0.50 


I.OO 


1,000 


500 


1,250 


C, $50 to $75... 


3.00 


2.25 


1.50 


o-7S 


1.50 


1,500 


75 


1,250 


D, $75 to $100 


4.OO 


3.00 


2.00 


I.OO 


2.00 


2,000 


1,000 


1,250 


E, over $100. . . 


5.00 


3-75 


2.50 


1.25 


2.50 


2,500 


1,250 


1,250 



responsible custodian of the funds; and guarantees pay- 
ments of rates promised. The company endeavors to pro- 
vide partially disabled employees with occupation suited to 
their abilities. This company has three forms of benefits 
relief, pensions, and savings schemes; here we consider 
only the first. While the administration is conducted by 
the company there is an advisory committee on which the 
employees are represented. Members are classified accord- 
ing to wages. 

The benefits for disablement are not paid for Sundays 
and holidays. The higher rates for accidents are paid 
during the first 26 weeks and then the lower during the 
subsequent disability. Sickness benefits are paid after the 



226 INDUSTRIAL INSURANCE 

first week for 52 weeks. The death benefits where death is 
due to sickness are ordinary and maximum as shown in 
the table. 

Employees not exposed to special risks of accidents may 
insure for natural death benefits only, or for both natural 
death and sick benefits at 25 cents per month, which is also 
the cost of additional natural death benefits. The modes of 
payment are made quite flexible, to be adapted to various 
incomes and hazards. Membership is said to be voluntary 
though preference is given in the retention of employees to 
those who belong to the relief department. No person 
over 45 years of age is admitted to membership without 
approval of the president of the company. 

The total receipts since the establishment of the plan 
have been $9,520,628.80; of which membership payments 
furnished $8,730,415.40, the company paid $344,590.75, 
and other sources $445,622.65. The average receipts per 
year have been $410,962.38. The receipts for the year end- 
ing June 30, 1903, were $775,646.43 ; from members, $712,- 
595.82; from company for operating expenses, $10,000; 
reserve fund, $6,000; interest, $35,115.04; bonds redeemed, 
$10,000; miscellaneous, $1,935.57. Total disbursements 
since the beginning, $8,691,061.88; for accident benefits, 
$1,468,259.96; sickness, $2,257,336.38; death, $3,781,304.- 
95; operating expenses, $931,373.04; other $252,787.55; 
average disbursement per annum, $375,153.75. Disburse- 
ments for the year ending June 30, 1903, were $732,102.97; 
for death' benefits, $178,500 (accidents) ; death benefits 
(natural causes), $152,090; disablement from accident 
$129,362.60; disablement, sickness, $178,867.38; surgical 
expenses, $14,909.81; refunded to members, $12,274.68; 
advances, $2,564.80; operating expenses, $68,076.18. The 
total membership, June 30, 1903, was 41,783, or about 90 
per cent, of the entire working force of the company. The 







INSURANCE PLANS OF RAILWAY CORPORATIONS 227 

total membership is divided between hazardous and non- 
hazardous occupations; the former include 28.75 P er cent - 
and the latter 71.25 per cent. The surplus funds at the close 
of each fiscal year are used either to reduce the next year's 
contributions, or to increase the amount payable for natural 
death or to increase pensions. 9 

The Cleveland Terminal and Valley Railroad Co. (88.- 
38 miles, i, 088 employees) has a department closely akin to 
the Baltimore and Ohio Relief Department. The total 
receipts from membership dues during 1903 were $17,- 
148.65. Total disbursements during 1903 were $9,304.42 ; 
for accidental deaths, $2,000; for natural deaths, $500; 
disablement from accident, $3,126.67; disablement from 
natural causes, $3,094.95 ; surgical expenses $582.80. The 
number of members was 995 (399 in hazardous class and 
596 in non-hazardous class). 

The Philadelphia and Reading Railway Co. established 
its relief association October 30, 1888. The contributions 
and benefits are the same as those of the Pennsylvania Sys- 
tem. An additional $100 is paid with each death benefit out 
of the surplus fund without regard to class. The yearly 
surplus is used for the superannuation fund or in some other 
way for the benefit of the members. The maximum age for 
admission to membership is 45 years. Benefits are not paid 
longer than 52 weeks, but the claim to death benefit does not 
cease with that period. The employee loses his rights when 
he ceases to be an employee, except that if he has been a 
member 3 years he may retain rights in the death benefit. 
The company contributes 5 per cent, of the amount paid by 
employees and makes good deficiencies in funds if there are 
any. The total receipts since establishment of the fund 
have been $4,049,494.11; from members, $3,362,678.05; 
from company, $443,831.68; other sources, $242,984.38; 

9 Riebenack, op. cit., p. 46. 



228 INDUSTRIAL INSURANCE 

average receipts per year, $269,966.28; receipts for the year 
ending November 30, 1903, $299,940.11. The total dis- 
bursements since the beginning have been $3,596,729.96; 
for accidents, $880,574.66; sickness, $895,794.16; death, 
$1,436,708.05; operating expenses, $375>O77- 2 5; other, $8,- 
575.84; average annual disbursements, $241,765.54. Dis- 
bursements for the year ending November 30, 1903, were 
$292,423.41; for death benefits, accidents, $46,250; death, 
natural causes, $64,550; accidental death, from surplus 
fund, $10,200; death from natural causes, from sur- 
plus fund, $15,100; death benefits to former employees, 
$3,500. The total death benefits were $139,600. Dis- 
ablement benefits were for accidents, $65,152.50; natural 
causes, $70,016.30; surplus fund, $316.20 (accidents); 
surplus fund (natural causes), $651.90; total $136,136.90. 
Salaries and expenses of medical examiners were $16,- 
186.51. The expenses of operating the association during 
1903 were $33,658.40, of which the company paid $17,- 
471.89 and the relief fund paid $16,186.51. The company 
also contributed $12,955.02 to the fund $30,466.91 in all. 
The average annual mortality per 1,000 members was 12.1. 
The membership on November 30, 1903, was 18,951, or 80 
per cent, of employees. 

The Atlantic Coast Line Railroad (4,138.87 miles, 
17,512 employees) established its relief association April i, 
1899; but this company already had a relief and hospital 
department under the previous title of the corporation, the 
Plant System. The rates of contributions and benefits are 
so near those of the Pennsylvania System that they need not 
be repeated. In 1903 there were 8,129 members, about 62. 
per cent, of the working force. The membership was dis- 
tributed according to grades: general office and station 
employees, 23 per cent. ; trainmen, yardmen, telegraphers, 
23 per cent. ; enginemen and firemen, 12 per cent. ; machine 



INSURANCE PLANS OF RAILWAY CORPORATIONS 229 

and car-shop employees, 25 per cent.; track department 
employees, 17 per cent. Members of the family of an 
insured employee are permitted to enter a company hospital 
for needed treatment at reduced rates. The release clause 
is very explicit : 

Acceptance by the member of benefits for injury operates as a 
release and satisfaction of all claims against the company for dam- 
ages arising from or growing out of such injury. If any suit is 
brought against the company for damages all obligations of the Relief 
Department will be forfeited. If a claim for damages is settled with- 
out suit or by compromise, such settlement will release the Relief 
Department and the company from all claim. 

The Chicago, Burlington and Quincy Railroad Co. 
(8,324 miles, 38,350 employees). The relief department 
was established March 15, 1889, and went into operation 
June i of the same year. The basis of contributions and 
benefits is similar to that of the Pennsylvania system. Ar- 
rangements are made for commutation of benefits in case of 
grave injury on payment of a lump sum, the injured man 
being required to sign away his right to bring suit under the 
employers' liability law. The sums paid range from $800 
to $3,200 for loss of hand or foot above the wrist or ankle, 
or twice these amounts in case of loss of both hands or both 
feet, or of one hand and one foot. Membership may be con- 
tinued after leaving the service, in case of three years' of 
previous service and one year of membership in the depart- 
ment. The maximum age of admission is 45 years. The 
rate of mortality is stated to be 8.7 per 1,000 per annum. 
The receipts of the fund from the establishment of the plan 
to December 31, 1903, were: $4,368,215.69, of which the 
employees paid $4,197,912.42, the company $42,532.94 for 
deficiencies, and $127,770.33 came from other sources. The 
average annual receipts have been from all sources, $337,- 
489.90. The total disbursements since the beginning 



230 INDUSTRIAL INSURANCE 

$4,592,579.36; for accident benefits, $1,432,372.94; sick- 
ness, $1,127,247; death, $1,167,019.50; operating expenses, 
paid by the company, $865,939.92; the average disburse- 
ments per annum, $332,504.71. The company is custodian 
of the funds and advances money to meet obligations. Sur- 
plus funds are invested in securities. The membership on 
December 31, 1903, was 22,141, about 58 per cent, of the 
working force. Of the engineers 95.97 per cent, were 
members; of firemen, 96.56 per cent.; of conductors, 90.09 
per cent. ; of brakemen, 96.82 per cent. ; of switchmen, 96.39 
per cent. ; of trainmen, enginemen, and yardmen as a group, 
95-59 P er cent - ; f a ll others 48.87 per cent. 

The objections of many of the employees of this road 
to the feature of the scheme requiring an injured man to 
sign away his rights to sue the company under the liability 
law in order to enjoy benefits from the fund which was 
created chiefly by the contributions of the workmen have 
grown more strong with time and led to the introduction 
into the legislature of Illinois of a bill to make such use of 
the relief fund illegal : 10 

Providing that in all actions hereafter brought against any employer 
to recover damages for personal injuries to an employee or where 
such injuries have resulted in his death, no contract of employment, 
insurance, relief benefit, pension, or indemnity for injury or death 
entered into or on behalf of any employee, nor the acceptance of any 
such insurance, relief benefit, pension, or indemnity by the person 
entitled thereto, shall constitute any bar or defense to any action 
brought to recover damages for personal injuries to or death of such 
employee, and providing that upon the trial of such action against 
such employer the defendant may set off therein any sum such 
employer has contributed toward any such insurance, relief benefit, 
pension, or indemnity that may have been paid to the injured 
employee, or, in case of his death, to his personal representative. 

The lower house adopted this bill by a very large major- 
ity vote on February 28, 1907. 

10 45th Assembly, House Bill 16, February, 1907. 



INSURANCE PLANS OF RAILWAY CORPORATIONS 231 

The Lehigh Valley Railroad Co. (1,398 miles, 18,621 
employees), established a relief department January, 1878, 
to provide indemnity for accidents, but without sickness 
insurance. There is no medical examination for admission, 
nor age conditions. Officers of the company administer the 
plan, and the company pays the costs of management. The 
fund is replenished by assessments levied at intervals of four 
or five months and not to exceed $3 in any case. The 
company pays an amount equal to the sum of the contribu- 
tions of the employees. Benefits are paid on the basis of 
the contributions to the credit of each member at the time 
of injury. Employees receive accident benefits, at the rate 
of three-fourths of the amount of contributions for the call 
during which injury occurred, for every week day, exclusive 
of holidays, for a maximum period of 9 months, if disability 
continues so long. A burial benefit of $50 is paid, and the 
family of the deceased employee receives an allowance for 
every working day, at the rate of three-fourths of the 
amount of his contributions for 2 years. The cost of surgi- 
cal and medical care is deducted from this payment. Arti- 
ficial limbs are paid for out of this fund. Contributions are 
not refunded whether the employee is dismissed or leaves 
the service voluntarily. The total receipts from the begin- 
ning to 1903 were $938,796.52, of which the company paid 
one-half. The average annual receipts were $36,107.56; 
total disbursements during the period, $924,236.35 ; average 
for each year, $35.547-55- Membership in 1903 was 6,505, 
about 35 per cent, of the entire working force: employees 
in train service, enginemen, firemen, .conductors, brakemen, 
80.9 per cent. ; maintenance-of-way, 31.3 per cent. ; mainten- 
ance of equipment, 32.1 per cent. It may be noted here 
that this company accepts the principle of paying half the 
cost of accident insurance in addition to paying expenses of 
administration of the fund. 



232 INDUSTRIAL INSURANCE 

The Long Island Railroad Co. (391.76 miles, 5,415 
employees), organized its department January i, 1886. 
The fund is administered by the president of the company 
and eight others, of whom five are elected by the employees 
and three are appointed by the president. The company 
pays the salary of the secretary, interest on funds, and fur- 
nishes office room. The membership dues are based on 
salaries and deducted from the pay-roll. 

Members in Class I, with a salary of $60 and over per 
month pay $i monthly dues and receive weekly benefits of 
$9; the death benefit in this class is $400. In Class II, 
wages $40 to $60, dues are 75 cents, benefits $6.75, and 
death benefit $300. In Class III, the wages are $40 and 
less, the dues 50 cents, the weekly benefit $4.50, and death 
benefit $200. Benefits begin on the eighth day and continue 
six months. The total receipts since the establishment of the 
fund have been $382,395; the average per year, $21,- 
244.17. Receipts for the year ending January 31, 1904, 
were $58,884.32; total disbursements, $367,233; average 
per year, $20,401.83. Payments during the year ending 
January 31, 1904, were $42,186.86: disablement from acci- 
dents, $10,373.34; natural causes, $15,011.37; death benefits, 
accidents, $7,300, natural causes, $9,300. Stationery and 
printing cost $202.15. The membership was 4,700, about 
87 per cent, of the total working force. The annual rate of 
mortality per 1,000 was 14. 

The purely relief department roads hereinbefore discussed repre- 
sent an aggregate of 31,000 miles of roadway, or about 15 per cent, 
of the total railway mileage of the United States, with employees 
numbering 318,000, or about" 24 per cent, of the total number of rail- 
way employees in the country, and an insurance membership of 
206,000 employees, or practically 65 per cent, of the total number of 
employees identified with the service of the roads involved; and this 
membership percentage would be largely increased were the computa- 
tions based on the exclusion of non-membership employees, who are so 



INSURANCE PLANS OF RAILWAY CORPORATIONS 233 



because of ineligibility for membership, owing to age or physical dis- 
qualifications. The combined average annual disbursements of these 
departments aggregate about $2,230,000 while their combined disburse- 
ments since organization aproximate $37,1 50,000." 

Pension schemes of railroads. The first railway cor- 
poration to establish a pension fund was the Baltimore and 
Ohio (October i, 1884). The present standard of pension 
funds was established about the year 1900. The following 
table presents the essential facts. 12 

TABLE v 







RETIREM 


ENT AGE 








Voluntary 


Involuntary 




Group A 


126 700 


61-60 


6"?-7O* 


3C AC 


Group B . . 


"^j/yy 
46,378 


under 65 


65 


4"> 


Group C 


2,676 


under 60 


60 




Group D .... 


4,4^4 


6064 


6s 


2C 4C 


Group E 


II, Qtr-z 


6< 60 


70 


7t 41; 


Group F 


228,040 


6< 60 


70 


2C 


Group G 


2-j,-?O7 


6060 


70 


JC 













* 70 sedentary, 65 active. 

In Group A were the following roads: Atlantic Coast 
Line ; Houston and Texas Central ; Illinois Central ; Oregon 
Railroad and Navigation Co. ; Oregon Short Line ; San 
Antonio and Aransas Pass ; Southern Pacific ; Union Pacific. 
In Group B : Baltimore and Ohio. In Group C : Bessemer 
and Lake Erie (in connection with Andrew Carnegie En- 
dowment Fund), Group D: Buffalo, Rochester and Pitts- 
burgh. Group E: Central of New Jersey. Group F: 
Chicago and Northwestern; Pennsylvania System, east and 
west; Philadelphia and Reading. Group G: Delaware, 
Lackawanna and Western. The Atchison, Topeka and 
Santa Fe road established its system in 1906. 

There were, in the year 1903, 16 such organizations in 

11 Riebenack, op. cit., p. 77. 
15 'Ibid., p. 9, addenda. 



234 



INDUSTRIAL INSURANCE 

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INSURANCE PLANS OF RAILWAY CORPORATIONS 235 

operation and 2 in preparation. The roads having such 
departments had more than 50,000 miles of railway, or 
about 24 per cent, of the total railway mileage of the coun- 
try, and about 500,000 employees, 38 per cent, of the work- 
ing force. The annual appropriations were not over 
$1,350,000. Eight of the roads had set aside a fund of 
about $600,000. Twelve of the roads had expended, up to 
the end of 1903, $2,500,000, and the companies had on their 
rolls 3,200 pensioners. In the United States the bene- 
ficiaries make no contributions to the funds; the corpora- 
tions meet the entire expense. The income is derived from 
the interest on a definite sum which is made the basis of the 
plan, and additional appropriations are made as required. 
In some cases the company simply assumes responsibility 
for a maximum annual disbursement. 

The objects of the departments are uniformly to provide for com- 
pulsory retirement from service at 65 or 70 years of age, with any- 
where from ten to thirty years' continuous service, on a fixed pension 
allowance, computed, usually, at I per cent, of the average monthly 
pay for the ten years next preceding retirement, for each year of ser- 
vice. Involuntary or compulsory retirement takes place between ages 
65 and 70, and voluntary retirement, growing out of incapacitation, 
between ages of 61 and 69 years. 13 

The plans devised by the Baltimore and Ohio and by the 
Pennsylvania companies are models for the others. In the 
American schemes all employees are included without regard 
to grades and classes. 

The Massachusetts Labor Bulletin, January, 1907, pre- 
sents a table (Table VI) which shows the results of the 
various railway pension systems so far as known from 
reports then published. . 

In the typical system the pension is optional with the 
road and no definite sum is promised. Mr. Riebenack 
interprets the policy in this language: 

13 Ibid., p. 9, addenda. 



236 INDUSTRIAL INSURANCE 

It stands for an annual allowance of money .... without an 
equivalent in labor or otherwise generally, however, in consideration 
of past services. The pension allowance is purely an optional railway 
disbursement from railway revenue exclusively, the employee making 
no contribution whatever to the scheme, which is absolutely subject to 
company direction and control. 

Control is exercised either through an autonomous de- 
partment or directly by officers of the company. Being not 
a legal contract but a gratuity, it has only such assurance 
of permanence as comes from the will of the corporation. 
It does not seem probable, however, that the corporations 
will recede from their plans, because these are so advanta- 
geous to the company; but there is no legal obligation to 
continue. No definite amount is promised and usually pro- 
vision is made for ratable reductions in pensions when the 
income does not cover the expenses. Allowances are as a 
rule based on age and service. Lump sums are not paid 
in settlement of claim, and allowances cease at death of the 
pensioner. The aggregate mortality of pensioners since the 
establishment of the schemes up to the end of 1903 was 
1,150. 

Since the system adopted by the Atchison, Topeka and 
Santa Fe R. R. Co. is one of the most recent developments 
of the pension idea it is herewith presented in some detail. 

Of the motives and advantages of this scheme Mr. 
George E. Tunell, secretary of the Board of Pensions, says : 

The pension system will relieve the strain and stress of life's 

struggle before, as well as after, retirement While the pension 

allowances in themselves will not be large enough to enable anyone 
to live in the manner of life maintained before retirement, they will 
be a substantial help, especially to those who have received small 
wages. It was not designed that the pension system should remove 
the necessity for saving. It was expected that it would act as another 
inducement to thrift and industry, and that, by giving new hope of an 
independent old age free from want, an additional incentive would be 



INSURANCE PLANS OF RAILWAY CORPORATIONS 237 

given to work and save. To be near a goal that is worth while should 
make all eager to reach it. 

The pension system the company has devised is the most liberal in 
existence, and it marks a big advance over all others now in force. It 
may be of interest to point out a few of the features in which our 
system departs from those of all other railroads. 

On the Santa Fe no additional restrictions are placed on the 
employment of new men, and no employee will be arbitrarily retired 
simply because of having reached the age of sixty-five, or seventy 
years, as the case may be. Employees will be retained in the service 
as long as they are able to perform their duties satisfactorily, or some 
new duty that is less arduous and exacting. Retirement will be for 
incapacity alone, the Board of Pensions deciding when a man is too 
old to remain in the service. 

The Santa Fe plan also differs from all others because it dis- 
tinguishes between the men who have received small salaries and those 
who have enjoyed large salaries. It discriminates between those whose 
opportunities to lay something by have been limited and those who 
could put something aside for a rainy day and yet have many of the 
comforts of life. To all whose salaries have been moderate our 
system is more generous than any other; first, because it gives the 
pensioner of small salary a larger percentage of his whole salary for 
each year of service; and, second, if this does not amount to at least 
$20 a month, it is raised to $20, this being the smallest pension the 
company will give any pensioner. An illustration will show how much 
more generous our system is. Under the system in force on any 
other railroad a man who had worked for twenty years at a salary of 
$50 a month would receive a pension of $10 a month, while under 
our system he would receive $20 a month. On the Santa Fe there 
will be neither very small nor very large pensions, because of the 
minimum and maximum provisions of our system. Under all other 
systems there is no limit either to the smallness or the bigness of 
pension allowances. No other system draws a line between those 
having good opportunities to save and invest and those who have not 
had such opportunities. 

Our system is also unique in recognizing exceptionally long and 
efficient service. The Board of Pensions has power to increase the 
ordinary allowances by 25 per cent, for unusual merit. 

The amount of pension any person may be granted by the Board 
of Pensions will depend on three conditions: (i) The amount of 



238 INDUSTRIAL INSURANCE 

highest average monthly pay received during any consecutive ten years 
of service; (2) the number of years in the service of the company or 
of its auxiliary companies, and (3) the character of the service taken 
in connection with the length of the service. 

The lowest pension is $20 and the highest $75 a month. 
No pension is allowed to any officer or employee who shall 
make or enforce any claim against the company for damages 
by reason of any injury or accident occurring within three 
years prior to the date when such employee shall be retired 
or leave the service. A person who leaves the service for 
two months loses his claims and must enter as a new 
employee. No person who becomes an employee after the 
age of fifty is entitled to a pension. The rate of pension 
is reckoned by counting for each year of service an allow- 
ance of ij4 per cent, of the first fifty dollars of the highest 
average monthly pay of the officer or employee during any 
consecutive ten years of service, and, in addition, J4 of i 
per cent, of any excess of such highest average monthly 
pay over fifty dollars ; but no pension must be less than $20 
nor over $75 a month. 14 

14 Since the Grand Trunk Railway has important business in the 
United States its recent scheme of pensions, which went Into effect Janu- 
ary i, 1908, deserves mention here. For many years the Grand Trunk 
Railway Insurance and Provident Society has furnished sickness and 
accident insurance and a death benefit. The new old-age pension plan has 
many excellent features. Officers and employees are to be compulsorily 
retired on reaching the age of 65 years, except by special action. A dis- 
abled employee may be retired at 60 years after 20 years of service ; and 
any employee, after a service of 10 years may be eligible for a pension 
during disability. The rate of pensions is fixed by taking i per cent, for 
each year of continuous service on the highest average rate of pay during 
any ten consecutive years of service. Thus an employee in continuous 
service from the age of 30 years to 70 with the highest average rate of 
wages between 40 and 50 of $1,000 per annum, would receive forty 
one-hundredths of $1,000 or $400 per annum. No pension is to be 
lower than $200 per annum. No employee who sues the company for 
damages on account of personal injuries sustained by him in the course of 



INSURANCE PLANS OF RAILWAY CORPORATIONS 239 
CRITICISM OF RAILWAY RELIEF FUNDS 

The fairest starting-point for a criticism of the railway 
schemes of industrial insurance is the recollection of the 
condition of affairs in railway occupations before these 
plans were introduced, and a survey of the general neglect 
of this obligation by other employers at this time in the 
United States. Judged in this way the managers of the 
great transportation corporations deserve credit for their 
humanity, foresight, and energy in establishing and admin- 
istering these funds. They represent an enormous advance 
upon anything hitherto known in this country, and they 
point the way to further progress. Their example is already 
stimulating other employers to think and act in the same 
direction. Their carefully kept records furnish a fund of 
statistics of experiences which will aid in improving future 
schemes. If at certain points we compare these pioneer 
methods with those more advanced in Europe, and especially 
in Germany, it is only because progress is desirable and 
comes partly by comparison; and because it would be fatal 
to settle down into national self -congratulation and stagna- 
tion when the fact is that we are only in the infancy of the 
movement. That the railway companies have found it 
economically possible and even profitable to go so far is a 
complete refutation of the oft-repeated assertion that, be- 
yond paying market wages nothing further can be done; and 
the humanitarian reasons already given by the managers 
of these funds puts to silence the claim that social care of 
wage-earners is no part of the duty of employers. A breach 
is already made in the Chinese wall of the antiquated "eco- 
nomic-man" theory; an opening is already happily made for 
still larger applications of the same principles. Our criti- 

his service will have any claim for pension. No legal right to hold a 
position or to receive a pension is given by this plan. The pension fund 
is administered by a pension committee. 



240 INDUSTRIAL INSURANCE 

cisms are designed to show in what directions the movement 
will logically and naturally carry us. 

Motives of the companies. As the managers of -these 
companies must report to the stockholders they have thus 
far aimed to show that the expenditures on insurance made 
by them were justified on the ground that they increased the 
efficiency of the employees and so tended to produce higher 
dividends on investments. But there is also recognition of 
social obligation of capitalists who are in places of power. 

The railroads began and are still moving on the principle that 
there is indissoluble mutuality of interest between employer and 
employee .... These provisions, so evidently actuated by truly 
humane purpose, have inevitably resulted in improved mental, moral, 
and physical conditions, thus developing a reciprocal feeling between 
capital and labor, and at the same time energy has been vitalized and 
ambition stimulated among the rank and file of railway employees. 15 

As will be shown, these desirable results have been 
achieved chiefly at the cost of the employees; the aid of the 
companies being valuable but financially subordinate in case 
of sickness, accident, and death benefits. In case of old-age 
pensions, however, the burden is carried entirely by the com- 
panies. But from any point of view the employees have 
great advantages. They are interested in the administra- 
tion of the relief departments; they are directly represented 
by their elected representatives on the advisory committees ; 
the department serves as a friendly bond between workmen 
and employers; misery and sorrow are mitigated; the 
health and force of the workmen are improved, and labor 
becomes thereby more productive and remunerative. Ordi- 
narily the employee when injured prefers to accept the cer- 
tain and considerable indemnity offered in ready cash by his 
fund to the uncertain outcome of a costly legal process 
which will make him lose his occupation when restored to 

"Riebenack, op. cit., p. 8; see also address of J. C. Bartlett, in 1897, 
before the St. Louis Railway Club. 



INSURANCE PLANS OF RAILWAY CORPORATIONS 241 

health or his pension in old age. The manly virtues are 
fostered, since the workman no longer is obliged to accept 
charitable relief as in former days. An unsystematic, un- 
organized, and unequal charitable relief is displaced by a 
purely economical method, in which the burdens are equit- 
ably distributed over many, and the advantages may be taken 
without loss of self-respect. After a long illness the em- 
ployee does not return to work discouraged and enfeebled 
by a load of debt, with his savings dissipated by expenses. 
That part of his earnings which might in many cases have 
gone for drink or other useless consumption under this 
system goes to purchase insurance against a time of need, 
The provision for immediate medical and surgical aid helps 
to prevent much illness, and men are not driven to return 
to work before it is safe, since they and their families have 
means to meet the more urgent needs of existence. At first 
the administrators and clerks were unwilling to accept the 
burden of caring for the fund, because it demanded many 
new duties and extra work; but gradually the manifest 
advantages won their approval. 

Security of funds and payments of indemnities. There 
seems to be no ground for doubt that the funds are secure 
and that the promises of the relief department will be met. 
The companies guarantee the financial obligations and have 
a plan which provides for payments as they are required by 
the contracts. 16 The significance of this fact cannot be too 
strongly emphasized. It means that only under expert 
management and in connection with very large associations 
of men is social insurance real "assurance." The honesty 
and efficiency of administration are here guaranteed as sub- 
stantially as they can be made under private management; 
and the publicity of accounts is further security for sound 
business management. Much of the subjective value of 

"Riebenack, op. cit., p. 32; Willoughby, op. cit., pp. 310, 315. 



242 INDUSTRIAL INSURANCE 

insurance to workingmen lies in the certainty that what 
they pay out will sacredly be kept for the purpose for which 
they have made sacrifices and parted with their hard-earned 
money. 

Adaptation. The division of the members into five 
classes is a suitable means for its purpose which is to make 
the expenses and benefits of insurance proportionate to the abilities 
and needs of the different classes of employees. Further elasticity has 
been secured by the provision in the constitutions of practically all the 
departments, that members may, if physically sound, be assigned to a 
higher class than that to which the amount of their wages would 
entitle them, and by the opportunity offered them to take out additional 
death benefit insurance." 

Adequacy. The indemnities, as already shown in the 
tables, for disablement for accident and sickness, and the 
death benefits from both causes are sufficient to meet moder- 
ate demands. 

Equity of the burdens. In the description already given 
the distribution of cost of insurance for sickness, accident, 
death, old-age, and incapacity, the division and placing of 
the burden have been stated. In one respect the railway 
corporations seem to have the most liberal plan yet offered 
they pay the entire cost of old-age pensions. The only 
short-coming here lies in the guarantee of specific amounts ; 
"ratable reductions" in the payments of pensions are pro- 
vided for. The legal basis of the system is not absolutely 
reassuring, since all rests on the good- will of the company, 
and no contract or legal obligation exists. In a country with 
a completely developed system of insurance the provision 
for invalidism and old-age is placed on the solid founda- 
tion of a specific legal obligation and funds are provided, 
under public control, to meet the obligation. There is little 
probability, however, of the abandonment of these schemes 
by any railway corporation. 

17 Willoughby, op. cit., p. 310. 



INSURANCE PLANS OF RAILWAY CORPORATIONS 243 

Why do the companies prefer to assume the entire cost 
of the invalidism and old-age pensions ? The usual answer 
is that if the employees pay part of the premiums they must 
be admitted to share in the administration, and this might 
complicate relations with the trade-unions. Perhaps there 
are other reasons. Perhaps the companies wish to use the 
pension scheme to prevent litigation in case of accidental 
injuries. Perhaps the companies are not ready to make 
contracts absolutely binding them to provide pensions 
in the future. During the time of experiment the man- 
agement must feel its way along and modify measures 
according to experience. It is not necessary to keep a very 
large fund on hand for accident or sickness insurance; the 
income covers the expenditures each year or within a rela- 
tively short period; but in the case of pensions one must 
reckon with long periods for which large funds must be 
held in reserve. 

The accident insurance is closely connected with sickness 
and life insurance, and this fact somewhat complicates the 
situation, especially as the employing company is legally 
liable for disability only where it is due to the negligence of 
the employer. In criticism of the schemes under review we 
must keep in mind the employers' liability law elsewhere 
discussed. It could hardly be expected that a private com- 
pany would move very far in advance of the requirements 
of law. Indeed it may be said to the credit of the companies 
that they have voluntarily organized and substantially aided 
the departments of accident insurance without direct legal 
compulsion. At a time when the narrow legal provisions 
of the employers' liability law were generally regarded as 
substantially equitable, when it was supposed that each em- 
ployee individually assumed the ordinary risks of a hazard- 
ous occupation in the act of accepting employment and was 
expected to provide for himself out of wages and savings, 



244 INDUSTRIAL INSURANCE 

it was an almost revolutionary step for an employing cor- 
poration to admit that this ethical and legal rule was not 
satisfactory, and to make at least partial provision for 
indemnities by associated action with the workmen and by 
making considerable contributions to the funds. But as the 
community comes to discover and accept the principle of 
"professional risk," that a business which does not make 
good, as far as indemnity in money can do it, the losses of 
human energy as well as of broken and worn out machinery, 
is parasitic and socially bankrupt, the schemes of the rail- 
road companies will no longer satisfy the reason and con- 
science of men. According to the new ethical principle 
which has practically won acceptance in Europe, the em- 
ployers should pay all the cost of accident insurance, and 
the question of liability for negligence should not be 
considered except where there is manifest criminal action. 
But these railway schemes compel the men to pay much the 
larger part of the premiums out of their wages; and then 
they are liable to lose their claim upon the fund if they 
claim their legal rights under existing liability laws. Indeed 
it was chiefly to escape from the annoyance and cost of 
damage suits that the scheme was founded. There are 
antagonistic opinions on this point, and in fairness both 
must be stated. 

Mr. Riebenack states the side of the corporations thus : 

The applicant for fund membership enters into an agreement with 
the fund to accept, in the event of sustaining disablement by injury 
while in the service, and in the performance of service duties, the 
accident benefits specifically prescribed in fund regulations. This is a 
distinct agreement, with a good and valid consideration, made between 
proper contracting parties, and, therefore, invested with due legal 

status This manner of fund agreement does not deprive the 

member from instituting legal proceedings instead of taking the rate 
of compensation offered by the fund. It does provide, however, that 
when the member disregards his plain obligations under its terms, he 



INSURANCE PLANS OF RAILWAY CORPORATIONS 245 

thereupon forfeits his rights to fund benefits, and the question of 
company compensation will then depend wholly upon the merits of the 
case from a purely legal standpoint. 18 

The same opinion is defended by E. R. Johnson, in Rail- 
way Departments for the Relief and Insurance of Em- 
ployees, 2d ed., March, 1900, p. 99; and by J. C. Bartlett, in 
Railway Relief Departments, 1897. 

Willoughby represents another point of view : 19 

Even the little contribution that they (the corporations) do make 
is more than offset by the fact that the companies have used these 
departments to protect themselves against suits for damages on the 
part of their employees. The regulations of all the departments 
stipulate that members, or their beneficiaries, must elect, whether they 
will sue the companies for damages on account of the injures they 
have received, or accept the benefits of the relief fund. If they choose 
the former, they thereby forfeit all claim to the latter, and the accept- 
ance of the latter acts as a renunciation of all legal claims they may 
have against the companies. The departments are largely supported 
by the members themselves, and the receipt of benefits in return should 
in no way abridge their legal rights. The provision that the benefits, 
as far as they are paid from contributions made by the roads, should 
be considered as a part payment of any damages that might be 
recovered against the company might possibly be defended, but that 
the act of bringing suit should work a forfeiture of acquired rights is 
thoroughly immoral and contrary to public policy. The men have 
made payments for a particular purpose. That to cancel their rights 
is an injustice, it would seem must be beyond question. 

The objections of the employees are gathering force for 
an attack on these schemes on grounds similar to those urged 
by Willoughby. Thus Mr. E. E. Clark, former representa- 
tive of the Order of Railway Conductors, has said: 

The employees of the companies which conduct such departments 
in speaking when they are not afraid to speak plainly generally express 
the conviction that in so far as an employee who is a member of the 
department is concerned, he feels that if he should withdraw from it 

"Riebenack, op. cit. } p. 33. 

18 Workingmen's Insurance, p. 316. 



246 INDUSTRIAL INSURANCE 

he would incur the displeasure of his employers, and that, when the 
opportunity is offered, a fellow employee who retained membership 
in the department would be given a preference over him, and that so 
far as applicants for employment are concerned, the man who is not 
ready and willing to join the relief department, is not needed and does 
not secure employment. 

The applicant for membership in a relief department is required to 
execute a contract that, in the event of his being injured in the per- 
formance of his duties and of his accepting the benefits provided in 
the department for such cases, he thereby releases the employing cor- 
poration from all liability under the statutory or common law. This 
means that if a member of the department is injured through neglect 
of the company or of its agents and, believing that no permanent 
disability is to ensue, he accepts the first month's benefits provided by 
the relief department and tendered by the company and, later, finds 
that he is disabled for life or his death ensues, all efforts to recover 
damages from the company are forestalled by the company pleading 
the contract which the employee signed when becoming a member of 
the relief department. 20 

Mr. Clark admits that the contract is legally valid under 
the common law, but claims that it is unjust and cites the 
Iowa law forbidding the making of such contracts as the 
right method of correcting the evil. The bill introduced by 
employees of the Chicago, Burlington and Quincy road in 
the Illinois legislature of 1907 shows that this revolt is 
general and before long will be successful. The relief 
departments must be fair and not take advantage of the 
employees in their economic need of employment to force 
upon them an inequitable contract under the pretense that 
they are free to accept or reject it. It is evident that this 
dispute would cease if the principle of the British compensa- 
tion law or some insurance law requiring the employers to 
pay at least half the premiums and all expenses were to be 
introduced. 

The necessity for accident insurance is made plain by the 

20 National Civic Federation Review, March, 1905. 



INSURANCE PLANS OF RAILWAY CORPORATIONS 247 

statistics of casualties in the railway service. Only in this 
occupation have we approximately accurate records, and 
this because the federal law applied through the Interstate 
Commerce Commission makes reports of accidents obli- 
gatory. The report of the commission for 1904 shows the 
number of railway accidents from 1888 to June 30,1904. 
The number of employees killed was: in 1888, 2,070; in 
1904, 3,632; injured: in 1888, 20,148; in 1904, 67,o67. 21 
There has been an actual increase in every class of casualty, 
with employees, passengers, and others. The use of safety 
devices of certain kinds, introduced after long opposition 
and delay, has diminished the frequency of casualties result- 
ing from coupling and uncoupling cars. But from other 
causes the danger of accident has increased both relatively 
and absolutely. "In 1894 the liability to fatal injury to 
employees was as i to 428; in 1904 it stands as i to 357. 
If this comparison be made for trainmen, the liability to 
fatal accidents in 1894 was as i to 156; in 1904 it was as 
i to 120." If the corporations were legally obliged to pay 
all the premiums for accident insurance, as is done in Ger- 
many, instead of throwing most of the cost on their em- 
ployees, this increase of disabling and fatal casualties would 
be reduced. The managers would discover devices for 
preventing this economic leak. So long as they can compel 
the workmen to bear the larger part of this burden this 
incentive to discover and introduce safety appliances is 
wanting. 

The question is often discussed whether membership is 
compulsory or voluntary; for the situation is all the more 
irritating to the men if they believe that they are economi- 

21 A statement of the Interstate Commerce Commission, July 8, 1908, 
says that during the year ending June 30, 1907, i trainman was killed 
for every 125 employed, and i was injured for every 8 employed. A 
bad showing. 



248 INDUSTRIAL INSURANCE 

cally compelled to sign contracts which they regard as 
inequitable. The testimony of Mr. E. E. Clark places be- 
yond question the fact that the employees do regard them- 
selves obliged to become members even against their 
judgment and desire as a condition of securing or retaining 
employment or of promotion. Mr. Riebenack's statement 
may be regarded as the official view of the companies : 

Membership is purely voluntary. As a matter of fact compulsory 
membership is prohibited by the United States Arbitration Act of 
June i, 1898. It is sometimes held that membership is nominally 
voluntary but practically compulsory. This view undoubtedly rises 
from the circumstance that the companies, in accordance with the 
principle observed by all large business undertakings requiring the 
constant employment of large numbers of men, exercise the generally 
conceded right to decide upon the physical fitness and general qualifi- 
cations of applicants for positions in their service. In carrying out 
this principle the discriminations made between applicants may appear 
to the uninformed to indicate a disposition to enforce compulsory 
membership This is an erroneous conclusion. 22 

But in another place he says : 

In reductions of force, temporary or permanent, preference as to 
retention in the service will be given members of the Relief feature, 
other things being equal, over those in the same grades of service who 
are not connected with said feature. 83 

It is precisely this kind of preference which the employees 
feel to be "compulsion." 

Age classification in relation to death benefits. 24 The 
premiums paid by the men are classified by wage-earnings 
but not by ages. The fund thus raised is held for payments 
of indemnities not only for sickness and accident but also 
for death; and in this latter fact we come into the field of 
life insurance. It is a generally accepted principle of life 

22 Op. cit., p. 32. 

w lbid., p. 45- 

24 Ibid., pp. 311, 312. 



INSURANCE PLANS OF RAILWAY CORPORATIONS 249 

insurance that premiums ought to be graduated according 
to age, since it is unjust to compel a young man to pay as 
much as an older man. Perhaps it would be difficult in 
practice to grade the premiums by ages so long as all are 
paid confusedly into one fund; and this would seem to be 
an objection to such confusion. An element of unfairness 
remains which could be removed only by treating each kind 
of insurance apart, and fixing the premiums to meet the 
average risk by age and by form of occupation. 

That part of the fund which is paid by the employees 
for life insurance proper (death benefits) was paid with the 
hope and expectation and understanding that it should be 
available for their families in case of death. The part paid 
for protection in case of disablement by accident or illness 
was contributed only to meet the needs of the current year. 
When the corporations upon discharging a man decline to 
reserve for him any equitable claim on the fund they violate 
a plain moral right which life insurance practice and legis- 
lation have long recognized. That the workman is required 
to sign away this claim in advance when he enters the relief 
department does not alter the fundamental moral equities of 
the situation. Here also the failure to distinguish between 
accident and sickness insurance on one side and death bene- 
fits on the other leads to error and wrong. It is fair now 
to quote the defense made by the official representative of 
the railway departments : 

No provision is made for the return to members of the relief fund 
who leave either the service or the fund, of any proportion of their 
contributions, for the reason that during their connection therewith 
they have been protected against sickness and accident at a minimum 
cost, and to make repayments would necessitate an increase in rates, 
which would entail added expense to all members. It is also a fact 
that the laws of some states prohibit the continuance of fund death 
benefits after employees leave the service of the interested corpora- 



250 INDUSTRIAL INSURANCE 

tion, as being an infringment on and violation of existing legislation 
for the government of insurance practice. 

In some companies the right to continue in the fund after 
leaving the service, on condition of regular payments of 
dues, is recognized. 

These criticisms, if valid, prove only that the schemes 
ought to be revised and improved; in spite of them it re- 
mains true that the relief departments secure accident and 
sickness insurance at relatively low cost and represent an 
important advance on the conditions before their establish- 
ment. The next step is to secure national and state legis- 
lation requiring the companies to furnish adequate insurance 
against loss by accident, disease, and invalidism due to the 
employment, on condition that they be released from further 
liability, except in case of wilful negligence and violation 
of laws requiring protective devices. 



CHAPTER IX 

MUNICIPAL PENSION SYSTEMS AND PENSIONS FOR 
TEACHERS 

It is in the field of social care for firemen, policemen, and 
teachers of public schools that Americans are preparing their 
own minds most directly for industrial insurance, and it 
is there they are working out methods and constructing 
administrative machinery which will be models for the sys- 
tem of compulsory insurance of workingmen which seems 
almost at the door. The firemen and policemen are exposed 
to perils which make their appeal to the popular imagination, 
although loss of limb and life may be actually no greater 
than in several important industries. The servants of the 
public are constantly before the eyes of citizens, their 
exploits are heralded by the newspapers, and their deaths 
are made known to the world. Something of the glory of 
soldiers surrounds their activities in defense of property 
and life. Formerly the injured firemen and policemen, or 
the families of those killed in the course of duty, were aided 
chiefly by charity balls for which tickets were peddled by 
policemen from door to door, and this up to very recent 
times. This method was annoying to the public and hu- 
miliating to municipal employees, and it seriously interfered 
at times with their regular duties. 

Then came the voluntary associations of firemen and of 
policemen, with their monthly dues and benefits at death. 
But this method was also inadequate, uncertain, and unre- 
liable. Within recent years a regular system of municipal 
insurance has been legally established in several cities of the 
United States, and methods are gradually improved and 
developed. We find record of a law of New York enacted 

251 



252 INDUSTRIAL INSURANCE 

in 1871 providing for pensions of firemen, and in 1878 the 
policemen were similarly protected. The systems of various 
cities are by no means equally complete. In some places 
only retired and disabled officers are pensioned, while else- 
where widows, orphans, and dependent parents are aided. 

The motives which have been effective in establishing 
these systems are worthy of note, for their significance ex- 
tends far beyond their present sphere of action. First of all, 
it is felt to be shameful to permit the family of a man who 
died in the effort to protect life and goods to live in want 
and misery; the feeling which established veterans' pension 
funds is alive in these organizations. Furthermore the 
failure of the unaided efforts of the officers in their mutual 
benefit associations showed the necessity for a larger meas- 
ure of municipal direction and public assistance. Then it 
became clear that the pension funds enable faithful men to 
give their undivided attention to the service of the public 
without distraction of schemes to make money for old-age 
support in addition to the work of each day. Pensions for 
disability and old age tend to make the officer more faithful, 
careful, sober, steady, and to retain him in the service of 
the city. The hope of a pension at the end of a long period 
prevents frequent changes in the force, since men are not 
apt to desert an employment after a time and thereby lose 
their claim on support in the time of old age. 

A somewhat detailed description of the Chicago system 
may serve to illustrate the tendency in our cities, and to 
afford a more definite and adequate conception of kindred 
schemes elsewhere. 

The police fund is controlled according to a state law. 1 
The law of April 29, 1887, is the basis. There are several 
sources of income mentioned in the law : ( i ) three- fourths 
of all moneys received for taxes or for licenses on dogs; 

1 Kurd, Illinois Statistics, 1903, pp. 364-68. 



MUNICIPAL PENSION SYSTEMS 253 

(2) three per cent, of licenses of saloons and wholesale 
liquor dealers; (3) moneys paid for special services of 
policemen; (4) one per cent, of the monthly pension of 
each pensioned policeman ; ( 5 ) fines imposed on policemen 
as a disciplinary measure; (6) the proceeds of sale of lost 
or stolen property unclaimed from pawnbrokers, second- 
hand dealers, and junk stores; (8) fees and fines for carry- 
ing concealed weapons; (9) one-half of costs collected 
for violating city ordinances ; (10) rewards given to police- 
men, unless exception is made by chief of police; (n) one 
per cent, of monthly salary deducted from pay-roll; (12) 
three per cent, of all licenses not already mentioned up to 
$25,000 per annum (law amended, 1903). 

After the fiftieth year of age and the twentieth year of 
service the policeman is entitled to a pension of 50 per cent, 
of his former annual salary, but not more than $900 nor 
less than $600. In case of his death the widow receives the 
pension until her remarriage and the children until they are 
sixteen years old. If the policeman is disabled in service 
he receives a pension. The figures for 1906 show the 
following results : Officers who have retired after a service 
of 20 years, 136; widows of officers who had served 20 
years, 44 ; beneficiaries on account of disablement in service, 
26; widows of officers who died in the service, 86; widows 
of officers who died after service of 10 years, 157 ; guardians 
of minor children, 14; total number of beneficiaries, 463. 
The monthly pay-roll of the fund calls for $22,000. The 
monthly income is $23,000. This apparently indicates an 
accumulation in the general fund ; but in fact the number of 
pensioners increases faster than the income. It was the 
intention of the founders of the fund to set aside out of the 
surplus a fund for investment of $300,000, but the revenues 
have not made it possible to realize this hope. In order to 
spur the members of the corps to faithful activity in defense 



254 INDUSTRIAL INSURANCE 

of the public a notice was issued to the officers which called 
their attention to the fact that according to the law their 
pension fund would be augmented by fees and fines col- 
lected by them. The tendency of course is to keep the 
policemen alert and active in discovering and arresting 
violators of city ordinances and state laws. No record 
enables us to say how much this salutary influence is weak- 
ened by direct bribes paid into the hands of officers to induce 
them to relax their vigilance. The administration of the 
fund rests with a board composed of 5 persons; of whom 
3 are chosen by the mayor and 2 are elected by the officers 
themselves. 

The firemen's fund of Chicago is based on the same 
principles as those of the policemen's fund. The law of 
Illinois in accordance with which the fund is governed 2 pro- 
vides that the fund shall be fed from various specified 
sources: one per cent, of license fees; not to exceed one 
per cent, of the salary of members, to be deducted monthly 
from pay-roll; all rewards, fees, gifts, and emoluments paid 
for extraordinary services, unless specially granted to the 
member by the board ; fines and penalties imposed on mem- 
bers of the departments; gifts and legacies, if any; interest 
on invested funds up to $200,000; up to 2 per cent, of gross 
receipts of foreign fire insurance companies, that is com- 
panies not chartered in Illinois. The board of trustees of 
the Firemen's Pension Fund is composed of the treasurer, 
clerk, attorney, marshal or chief officer of the fire depart- 
ment, and the comptroller of the city. This board has power 
to administer the fund and to decide all questions as to 
applications for benefits without appeal. The board reports 
to the municipal council. During the year 1905-6 the total 
number of pensioners was 449; the monthly income of the 
fund, $9,500; monthly pensions paid, $11,000; amount 

" Hurd, Illinois Statutes, 1903, p. 368. 



MUNICIPAL PENSION SYSTEMS 255 

accumulated toward permanent fund, $151,000. All claims 
are paid in full. The income did not meet all needs and the 
permanent fund has been drawn upon to prevent deficits. 
But plans have been made for doubling the fees taken from 
foreign insurance companies. The fund is not large enough 
to retire some of the older men who ought to be retired. 
The rates of benefits at retirement are: for disability, 
monthly one-half of the former salary; the widow of a 
member who dies in the service, receives, so long as she 
remains unmarried, $30 monthly; the guardian of minor 
offspring, $6 for each child up to sixteen years of age; in 
all not exceeding one-half the monthly salary. After 22 
years of service a member who is fifty years of age may 
be retired with a pension of one-half his monthly salary; 
light duties may be assigned to those who are able to work, 
if emergencies exist; after decease his widow until her 
marriage and his young children have the pension. By an 
ordinance of the city of Chicago a member of the fire de- 
partment who is disabled may receive his full salary for 12 
months. This is true also of policemen, but the pension is 
not paid during this period. 

The fund of the fire-insurance patrolmen, employees of 
the board of underwriters, is interesting. It is administered 
by a board of trustees. The income is derived from an 
assessment of i per cent, of the salary deducted monthly 
from pay-roll ; up to 2 per cent, of funds devoted to support 
of fire-insurance patrol by the insurance companies; all re- 
wards, fees, gifts on account of extraordinary service (un- 
less specially granted by the board) ; and interest on any 
fund accumulated. The benefits assured are: disability, re- 
tirement pension of one-half the salary; in case of death, the 
widow of a member receives, until she is remarried, $30 a 
month, the children receiving $6 each up to the sixteenth 
year of age; in all not more than one-half the salary. If 



256 INDUSTRIAL INSURANCE 

the expenditures outrun the income the benefits are propor- 
tionately scaled down. In case of retirement after the fifti- 
eth year of age and the twenty-second year of service the 
pension is one-half the salary. These pensions cannot be 
attached for debts. At the time of the report (1905-6) the 
number of fire-insurance patrol companies in Chicago was 
8; the pensioners, 9 (one widow, one disabled man, and 6 
children) ; monthly payments, $139.16. The cost of operat- 
ing the department is $130,000 per year, of which 2 per 
cent, goes to the fund. The permanent fund is $100,000. 

Here we have a private corporation which has been 
granted by state law the right to assess the salaries of its 
employees i per cent, and to create a fund to which the fire- 
insurance companies contribute about i per cent, of prem- 
iums collected. This is apparently compulsory insurance and 
covers accident, sickness, invalidism, old age, and pensions 
to widows and orphans. This fund raises very interesting 
questions about the constitutionality of such a law, the right 
of injured employees to sue under the employers' liability 
law, and the cost of premiums of such insurance. 3 

PENSIONS FOR PUBLIC SCHOOL TEACHERS 

It seems desirable to treat this subject briefly in connec- 
tion with industrial insurance because it is a system in which 
the principle of public care of low-paid employees is in- 
volved ; because the teachers of American cities are in close 
contact with the population of wage-earners; and because 
the methods worked out promise to help develop similar 
provisions for workingmen. 4 The need of provision by 

8 The legislature of Illinois (Acts of 1905, pp. 96, too) modified and 
extended the provisions of former laws in an act to provide pension 
funds for municipal employees and an amendment to the firemen's pen- 
sion fund. 

* REFERENCES : Report of Committee on Salaries, Tenure and Pen- 
sions, of National Educational Association, 1905 ; W. F. Willcox, Bulle- 



MUNICIPAL PENSION SYSTEMS 257 

pensions for invalidism and old age has long been keenly 
felt among those who desire to make teaching a life pro- 
fession. The salaries are painfully inadequate to cover 
the cost of such provision. Numerous and pathetic attempts 
have been made by teachers themselves to organize insur- 
ance and the entire subject has been carefully investigated 
by a committee of the National Education Association. 

In the year 1900 there were in the United States 446,133 
teachers (118,519 male, 327,614 female). In each state 
and territory the ratio of teachers to the total population 
of persons between five and twenty-four years of age has 
increased. In continental United States 26.6 per cent, of 
the teachers are males and 73.4 per cent, are females. The 
percentage of male teachers is decreasing and that of female 
teachers is increasing. In the cities with over 25,000 in- 
habitants of every main division of the Union about 80 per 
cent, are women; in the country the percentage of women 
teachers varies from 59.5 in the South Central division to 
77.2 in the North Atlantic division. The median age of 
teachers has increased. 5 

The exhibit of salary schedules will show the need of 
pensions. The ordinary teacher belongs economically to 
the so-called "proletarians," and the recent organizations 
of trade-unions in affiliation with the American Federation 
of Labor are indications that many of the urban teachers 
share thoroughly the "class consciousness" of the wage- 
earners. The report of the National Education Association 
on salaries and tenure says : 

On the basis of fifty weeks of work during the year the earnings 
of the laborers would in nearly every city exceed those of the lowest 
paid elementary teachers. The wages of laborers here given represent, 

tin 23, Census Statistics of Teachers, Bureau of the Census, 1905; Report 
of Commissioner of Education, 1902, p. 712; 1903, p. 2449; 1907, p. 448. 
Bulletin 23, Census Statistics of Teachers, by W. F. Willcox. 



258 INDUSTRIAL INSURANCE 

it should be remembered, the earnings of the commonest untrained 
labor, while in scarcely any city of importance can a man or woman 
secure a position as teacher without some previous experience or 
special preparation (Report, pp. 146, 147). 

The minimum yearly salaries of teachers in elementary 
schools ranged from $216 (Burlington, Vt.) to $552 
(Boston) and $600 in San Francisco, where cost of living 
is high. As illustrations of annual salaries in typical un- 
graded rural schools we may cite: in Minnesota the range 
is from $320 to $450 for men and $200 to $450 for women ; 
in Iowa $180 to $300 for men and $143 to $360 for 
women. 

Naturally the tendency under these conditions is to keep 
men out of the teaching profession and give over the schools 
to young and relatively inexperienced girls. There is no 
outlook for old age in the work of public-school teachers. 
In cities of 8,000 or over in 1904, 50 per cent, of all the 
male teachers had been. engaged in teaching less than 13 
years, while of the female teachers 53 per cent, are found 
to have been in the profession less than 10 years; for all 
the teachers in these 333 cities considered together 51.7 
per cent, had taught less than 10 years; 10 per cent, of the 
men and 4.5 per cent, of women had taught 30 years or 
over. 

The report of the National Education Association on 
salaries makes a distinction between a pension system in the 
proper sense and various schemes of mutual aid, including 
retirement funds and old-age stipends, maintained primarily 
by teachers themselves and at their own expense. The pub- 
lic authorities have hardly made a beginning in the recogni- 
tion of a state duty to care for outworn teachers, and the 
service suffers in many ways from this neglect. Here and 
there we mark the beginnings of better things. In the year 
1905 Mr. Andrew Carnegie showed his appreciation of the 



MUNICIPAL PENSION SYSTEMS 259 

situation by establishing his great fund of $10,000,000 for 
pensioning college professors. Already the beneficial influ- 
ence of this great gift is felt in higher education. It marks 
the way for future development in elementary and second- 
ary education. The need for accident insurance is not much 
felt among teachers ; the chief need is provision for illness, 
invalidism, and old age. Sickness insurance may easily be 
provided through mutual benefit associations, but old-age 
pensions require more solid foundations and larger funds 
carefully guarded. 

The most direct and primitive method of providing 
benefits is through a voluntary association of the teach- 
ers themselves, without invoking authority or subsidy from 
the public. Thus we find mutual benefit associations, for 
temporary aid only, in Baltimore, St. Louis, Cincinnati, 
Cleveland, Buffalo, San Francisco, and St. Paul. These call 
for $i to $2 initiation fee and $i to $5 annual dues. Special j 
assessments are sometimes made. Benefits in sickness range 
from 50 cents a day to $10 a week; at death funeral ex- 
penses only are paid in some instances, and in others a sum 
equal to $i from each member of the association. 

Associations for annuity, or retirement fund only, are 
found in New York, Boston, and Baltimore, and there is 
an annuity guild in Massachusetts. The initiation fees 
are $3 to $5. The annual dues are from $5 to $6 per week, 
The time of service required before enjoyment of the an- 
nuity is from two to five years with disability, or thirty-five 
to forty without disability. In Harrisburg, Pa., the teachers 
maintain a voluntary pension or annuity fund, but receive 
no assistance from the board. A somewhat similar arrange- 
ment is reported from Norwich, Conn. Philadelphia has a 
charity fund, known as the Elkins Fund, of $1,000,000 
which provides for superannuated and indigent teachers. 
The report of the National Educational Association marks 



260 INDUSTRIAL INSURANCE 

a natural tendency to abandon or merge the voluntary 
schemes where the stronger and more reliable legal measures 
gain a footing. 

The necessity for having a legal basis for pension funds 
found expression in plans for requiring teachers to permit 
the deduction of a part of their salary for the maintenance 
of the fund. Such a law was passed in Ohio, but it was 
resisted by teachers of Toledo and failed in a test case 
before the Supreme Court of the state. The Supreme Court 
of Minnesota annulled a similar law which was made for 
the city of Minneapolis. Perhaps these schemes ought to 
be defeated since they do not rest on any well-defined public 
policy of care for teachers at public expense, but merely 
impose the burden on the teachers themselves who need all 
their salaries for immediate use, and whose brief tenure 
does not warrant sacrifices for those who continue in the 
service. 

The teachers who were anxious to establish pension 
funds have sought to avoid the constitutional objections 
which annulled the Ohio and Minnesota laws by creating 
a fund out of. voluntary contributions supplemented by fines, 
donations, and other uncertain and irregular sources of in- 
come. Laws authorizing such a plan for all cities and 
counties of the state now exist in New Jersey, Ohio, and 
California; and applying to cities of 100,000 inhabitants 
or more, in Illinois. The Illinois law 6 has recently been 

6 The essential features of the new Illinois law for the Teachers' 
Pension Fund in Chicago are : The administration of the fund is com- 
mitted to a board of trustees of nine members, the secretary of the 
Board of Education, ex-officio, two members of the Board of Education, 
and six members elected by the teachers who contribute to the fund. 
The Public School Teachers' Pension and Retirement Fund consists of 
money paid in by persons desiring the benefits thereof, and of gifts or 
bequests and other sources not yet known. Teachers contributing to the 
fund are divided into four classes: (i) those who have taught five years 
or less ; (2) those who have taught more than five years and not more 



MUNICIPAL PENSION SYSTEMS 261 

improved for it has long been regarded as very unsatis- 
factory. There is a law in Massachusetts which applies to 
Boston, and another to other towns and cities; in Rhode 
Island applying to Providence; and in New York and 
Michigan limited in action to certain cities. 

Another stage of development is marked by state laws 
which provide state funds to be administered by local or 
state organs. The Maryland law of 1902 is a type of ad- 
vanced action by a commonwealth : 

Whenever any person in this state has taught in any of the public 
or normal schools thereof twenty-five years, and has reached the age 
of sixty years, and his or her record as such teacher has been with- 
out reproach, and by reason of physical or mental disability or 
infirmity is unable to teach longer, the said teacher may lay his or her 
case before the State Board of Education, and the said board shall 
proceed to consider the same, and if the facts are found as above 
stated, the said teacher shall be placed upon a list, a record of which 

than ten years; (3) those who have taught more than ten years and not 
more than fifteen years ; (4) those who have taught more than fifteen 
years. Members of the first class, entering the service after the passage 
of this law, pay $5 per annum ; those in the second class pay $10 ; 
those in the third class pay $15; those in the fourth class pay $30; 
those sums being deducted from salary payments. Teachers who have 
withdrawn from the fund may be restored to its privileges by return- 
ing all they have withdrawn and what they would have contributed, with 
4 per cent, interest, and hereafter paying the sums due in their class. 

Benefits are payable when a member has taught 25 years in the public 
schools, or after 15 years' service if disabled; three-fifths of the period 
of service being in the city. The pension after 25 years' service is $400 per 
annum; and in case of disabled teachers, after 15 years' service, "such pro- 
portion of the full annuity of $400 as the sum contributed by such teacher 
bears to the total contribution required for a full annuity." 

The city treasurer is ex-oihcio custodian of the fund. If a teacher is 
not re-employed or is discharged, then such teacher shall be paid back the 
money he or she may have contributed under this law. Any teacher who 
shall retire voluntarily from the service, prior to entering the fourth 
class, shall receive a refund of one-half of the money he or she shall 
have contributed under this law. Annuities and pensions are exempt 
from attachment or garnishment or any claim of creditors. It is too 
early to form a judgment as to the value of the new plan. 



262 INDUSTRIAL INSURANCE 

shall be kept by said board, to be known as the "teachers' retired 
list," and the names upon said "teachers' retired list" shall be regu- 
larly certified by said board to the comptroller of the treasury of this 
state, and every person so placed upon the said retired list shall be 
entitled to receive a pension from this state of $200 per annum, to be 
paid quarterly by the treasurer of this state upon the warrant of the 
comptroller. 

It is interesting to notice that in this first distinct pension 
system for teachers a state board acquires an administrative 
function and power; and that the state acts independently 
of local bodies, as cities and towns. This method alone 
gives promise that all will be treated impartially and that 
local indifference and incompetence will not defeat the 
righteous purpose of the law. We find here a valuable 
suggestion for the way in which the state must go about 
establishing an effective plan of industrial insurance. 

We may here examine the systems of three cities which 
seem to have developed most thoroughly a system of pen- 
sions, New York, Detroit, and San Francisco. The 
systems of Chicago, Charleston, and Jersey City are sup- 
ported merely by deductions from salaries, with supple- 
mentary gifts from unreliable sources. The Poughkeepsie 
plan provides that 2 per cent, of the salaries be turned into 
the pension fund, while sums deducted for absence from 
duty, donations and legacies, are auxiliary sources. The 
law for this scheme was passed in 1902. In the city of 
Greater New York the retirement fund is fed from money 
forfeited or withheld for absence from duty, money re- 
ceived from gifts and bequests, 5 per cent, of all excise 
money or fees from licenses granted to sell strong liquors. 
The annuity is one-half the salary at the date of retirement, 
provided it does not exceed $1,000 in the case of a teacher 
or $1,500 in the case of a principal or superintendent; nor 
shall any pension fall below $600. 



MUNICIPAL PENSION SYSTEMS 263 

In the city of Detroit the fund is supported from gifts 
and legacies; from money appropriated by the board of 
education or raised by act of the common council and board 
of estimates ; tuition fees of non-resident pupils ; interest on 
daily balances of moneys appropriated for teachers' salaries ; 
moneys which the trustees of the retirement fund may trans- 
fer from the general fund. The general fund consists of 
deductions from salaries of teachers, not less than i per 
cent, nor more than 3 per cent., no deduction being made on 
a basis of more than $1,000; income from interest of general 
fund; all moneys deducted from teachers' salaries for ab- 
sence or for any cause; all moneys intended for the retire- 
ment fund and not left specifically to the permanent fund. 
The board of trustees consists of the president of the board 
of education, the president pro tempore of the board of edu- 
cation, the chairman of the committee on teachers and 
schools of the board of education ; the superintendent of city 
schools, and three teachers in the city schools elected from 
contributors to the retirement fund by ballot, as the board 
of trustees shall prescribe, for a term of three years, one 
teacher being elected each year. The rate of deduction 
from salaries is determined by the board of education on 
advice of the trustees of the fund. When the permanent 
fund has reached $100,000 no additions shall be made to 
it from salaries, except by a two-thirds vote of the board of 
education. The term of service required before a pension 
can be drawn is 30 years, of which 20 years must be in 
Detroit, or 25 years in the schools of Detroit. Teachers in- 
capacitated for duty, having taught 20 years, of which 10 
have been passed in Detroit, may be retired by a two-thirds 
vote of the board of trustees. Teachers who resign or are 
removed for cause, may apply after three months for such 
portion of money contributed by them as the trustees shall 
direct, not to exceed one-half of their contributions. An- 



264 INDUSTRIAL INSURANCE 

nuities are not to exceed $250. Current expenses of the 
board of trustees are paid from a maintenance fund of the 
board of education. 

The sources of the fund in San Francisco are: assess- 
ments of $12 per year deducted from the salaries of day 
teachers and $6 per year from the salaries of evening-school 
teachers receiving less than $50 per month; gifts and lega- 
cies, and not less than one-half the sums forfeited by 
absence from duty. The permanent fund is composed of 
25 per cent, of all moneys from these sources to the amount 
of $50,000 and of all gifts specifically bequeathed. The 
fund is administered by a commission consisting of the 
mayor, the superintendent of schools and the county 
treasurer who reports biennially to the supervisors. The 
retirement committee consists of five teachers, one at least 
from primary, and one from grammar schools, elected for 
3 years. The term of service is 30 years, with 30 years' 
assessments. The annuity is $50 per month. A proportion- 
ate annuity is paid to incapacitated teachers who have been 
contributors for at least 5 years. The annuity is suspended 
on return to public-school teaching, or when incapacity 
ceases, and if the person pensioned has received a sum 
which has reimbursed for former contributions. There is 
a provision for paying pro rata. Necessary expenses are 
paid from the funds. 7 

The law of Massachusetts applying to Boston, passed 
in 1900, was compulsory for all teachers who entered service 
after the enactment of the law and who voluntarily came 
under its provisions. The fund was maintained from gifts 
and legacies and from sums set apart by the trustees for 
the permanent fund; there was also the general fund made 
up of gifts and legacies not specifically assigned to the per- 
manent fund, amounts retained from salaries and the interest 

''Report on Salaries, etc., p. 183. 



MUNICIPAL PENSION SYSTEMS 265 

on the permanent fund. The Massachusetts legislature in 
1908 passed laws relating to teachers' pensions, chaps. 498 
and 589, Acts of 1908. The latter act was accepted by the 
Boston Board of Aldermen and the Common Council, and 
was signed by Mayor Hibbard on June 22. Two days later 
the School Committee passed an order appropriating, for 
this first year, $63,891.51, which seems to be five cents 
per $1,000 of valuation. 8 Various cities have the matter 
under consideration. According to the new law the School 
Committee of Boston is required forthwith to establish a 
permanent school pension fund, the rate of pension in no 
case to exceed $180 per year. The care of the fund is vested 
in a board of three trustees; the city treasurer is custodian. 
The School Committee is authorized to add to its levy of 
taxes a rate of five cents per $1,000 of valuation to maintain 
this fund. Pensions cannot be paid beyond the resources 
of this fund. The School Committee has authority to retire 
a teacher who has become incapacitated for duty. The 
normal rate for persons of sixty-five years is $180, and 
teachers retired under that age and with less than thirty 
years of service, receive pro rata smaller pensions. 

The other act (chap. 498) authorizes the voters of any 
city or town to establish a pension fund for teachers, and 
to maintain it by taxation. The pension is to be normally 
one-half the salary at time of retirement and never more 
than $500. 

The Ohio law, passed in May, 1902, extends the benefits 
of a permissive system to all school districts of the state; 
the authorities of each school district are granted the right 
to create a fund and retire teachers, but the act does not 
make it mandatory. The income is derived from payments 
by teachers of $2 per month, or $20 a year, deducted from 
the salaries of those teachers who have declared a desire to 

8 Data kindly furnished by Mr. M. C. Bradley, Actuary. 



266 INDUSTRIAL INSURANCE 

become contributors and subsequently beneficiaries of the 
fund. The school authorities may retire a teacher from 
service on account of mental or physical disability and apply 
the pension provisions after 20 years of service, provided 
that three-fifths of that time have been spent in the service 
of the district or county and two-fifths in other parts of the 
state or elsewhere. The term teacher includes principals and 
supervisory officers. The right to retire voluntarily and 
draw pensions is accorded to men and women alike after 
they have taught 30 years. The amount paid is $10 a year 
for every year served, but is in no case over $500 a year. 
Both interest and principal may be drawn upon to pay 
pensions. Certificates are given teachers each month show- 
ing what amount has been withheld from their salaries. In 
case a teacher resigns and retires from the profession she 
may claim one-half of the sum she has paid into the fund 
during her service in the school. The new school code of 
Ohio, passed April 25, 1904, contains the following clause: 

Any board which has created, or shall hereafter create, a teachers' 
pension fund, shall pay into such fund all deductions, fines, penalties, 
and assessments made against teachers and other employees of the 
board. Such board may also pay to such pension fund, out of the 
contingent fund, not to exceed 2 per cent, of the amount raised by the 
board from taxation. 

The next logical step will be to make the law mandatory, 
applicable to all teachers in all districts, make the system a 
state system rather than local, and contribute a more liberal 
sum from the general taxation. But this will take time. 

The state of New Jersey, in Article 27 of its school law, 
provides for the retirement of teachers. A board of trustees 
administers the fund and pays annuities according to the 
terms of the law. Any teacher may be retired on pension 
after 20 years of service, in case of disability, receiving one- 
half the average salary for the five years before retirement. 



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272 INDUSTRIAL INSURANCE 

The minimum annuity is $250 and the maximum $600. No 
teacher can be retired under these legal provisions unless he 
or she shall have first paid into the fund such sum as shall 
make his or her total payments into said fund equal to at 
least 20 per cent, of his or her average annual salary for the 
five years immediately preceding the time of retirement. 
The fund is maintained by deductions from salaries, i per 
cent, of annuities, gifts, legacies, and interest on investments 
of the funds. 

In 1895 a law was enacted in California (amended in 
1897 and in 1901) to create a public-school teachers' annuity 
and retirement fund in the cities and counties of the state. 
Teachers become contributors and beneficiaries by signing 
a contract and paying dues. The benefits accrue to members 
who have served 30 years in the schools of the state. 

The tendency of a system of pensions and sickness insur- 
ance is to lengthen the period of service, and thus to increase 
the number of teachers who have a strong professional 
spirit and who have time to give the community the advan- 
tage of long experience. At the same time it is easier to 
remove from the service those who are too old and feeble to 
be efficient without inhumanity. But such pensions ought 
not to be paid out of the meager salaries even now too low ; 
they should be supported from taxation, only those receiving 
over $1,000 being required to contribute and having higher 
rates of pensions on this account. 



CHAPTER X 

THE PENSION SYSTEMS OF THE UNION AND OF THE 
SEVERAL STATES 

The federal government. This system is instructive in 
relation to workingmen's insurance both as a precedent and 
as a warning. The costly errors committed in its founda- 
tion and administration will warn the future legislator to 
prepare carefully and scientifically in advance a consistent 
and reasonable plan. The pension idea itself, in spite of 
faults of law and administration, has already prepared the 
way for insurance of old age for wage earners. From the 
beginning of our history as a people the pension method of 
caring for servants of the community has been familiar. 
The earliest settlers of New England adopted the principle 
that it was both the duty and the interest of the common- 
wealth to provide pensions for those who risk their lives in 
war for the defense of all. 

In 1636 the Plymouth Pilgrims enacted a regulation that whosoever 
should set forth as a soldier and return maimed should be maintained 
by the colony for the rest of his life. The Virginia Assembly of 
1644 passed a law providing pensions for disabilities. Our first real 
pension law was passed by the Continental Congress, August 26, 1776. 

The central and state governments thus sought to en- 
courage enlistments in times of national danger. 

With the beginning of the Civil War pensions there is noted 
increasing liberality in conducting pension affairs. Up to 1879 a man, 
to be eligible for a pension, must have applied within five years after 
his discharge. The Arrears Pension Act of 1879 is one of the most 
noted of our pension laws. It provided that all pensions which had 
been granted under the general laws regulating pensions should com- 
mence from the date of the discharge of the person on whose account 
the pension had been granted. The rate of the pension for the inter- 

273 



274 INDUSTRIAL INSURANCE 

vening time from which the pension had been granted was to be the 
same as that for which the pension had been originally granted. 1 

From this time the sums expended rapidly increased. 
Military land grants. Ever since the War of the Revo- 
lution the government has given land freely to veterans of 
the wars. In addition to grants made by special acts of 
Congress the government has issued since the war for inde- 
pendence 598,628 warrants for 783,030 acres (Rep. Com. 
of Pensions, 1906, p. 10). 

In this connection we must compare the expenditures 
for pensions in this country and in Europe. It is true that 
we have no industrial insurance systems, but we give to a 
large number of superannuated workers a vast sum in the 
form of veteran pensions. In the year 1891 Great Britain 
expended on military pensions 5,410,822, less than $27,- 
054,000; France, $29,857,000; Germany, $13,283,000; Aus- 
tria, $12,245,000. The expenditures of the United States 
for the same purpose in that year were $11 8,548,959^ The 
disbursements for pensions by the United States from July 
I, 1790, to June 30, 1906, were $3,459,860,311. 23. 3 The 
amounts paid for the fiscal year 1905-6 were as follows : 
Regular Army and Navy (invalids, widows and 

dependents) $ 2,521,802.10 

Civil War, general law 56,789,837.93 

Civil War, Act of 1870 74,010,063.41 

War with Spain 3,442,156.53 

War of 1812 101,278.27 

War with Mexico 1,376,396.36 

Indian wars 622,874.85 

Treasury settlements 135,878.80 



$139,000,288.25 
Adding expenses of administration, total 139,881,726.85 

1 Butler, in N. C. C., 1906. 
2 Forum, Vol. XII, p. 426. 
'Report of Commissioner of Pensions, 1906, p. u. 



PENSION SYSTEMS OF THE UNION 275 

The total number of pensioners on the rolls June 30, 
1906, was 985,971. The highest number of pensioners at 
one time was $1,004,196, on January 31, 1905. As the 
veterans are growing old and feeble the rate of mortality 
is high and the cost will rapidly decrease. Evils and abuses 
have been inevitable. For many years since the Civil War 
the nation has grown rapidly in wealth ; the systems of tariffs 
on imports may have reduced the income of multitudes of 
consumers but along with the taxes on internal revenue 
objects, as alcoholic liquor and tobacco, have yielded the 
federal government an income sufficient to meet the ex- 
penses of military and civil service, to reduce the national 
debt to small proportions, and to produce an enormous sur- 
plus which has been a constant temptation to extravagance. 
Under these circumstances the veterans and their friends, 
with the aid of political pressure, have been able to secure 
from Congress such liberal laws as the civilized world cannot 
elsewhere show. As the manufacturers have desired to re- 
tain the high tariffs on imports as a protective measure they 
had to find a way, or many ways, to spend the surplus, and 
the soldiers could easily appeal to patriotic sentiment in ask- 
ing generous pensions. 

Homes for disabled volunteer soldiers. In addition to 
their pensions, which may be used for the personal care and 
enjoyment of the men or for the support of their families, 
the disabled volunteer soldiers have the use until death of 
some one of the homes provided by the nation or by one of 
the states. The grounds of these homes are made attractive 
and are visited by many people on account of their beauty. 
The inmates are well fed, comfortably clothed in army uni- 
forms, and receive the best medical care. Theatrical, 
musical, and literary entertainments are provided without 
charge, and chaplains conduct religious services. During 
the year ending June 30, 1905, 34,053 members were shel- 



276 INDUSTRIAL INSURANCE 

tered in the national and 19,677 in 30 state homes; a total 
of 53,730, an increase of 1,879 over tne preceding year. 4 

The expenditures for 1905 of the ten branches of the 
National Home were $3,343,696.67; the average annual 
cost per person was $157.76; the average age of those who 
served in the Mexican and Civil Wars, 66.26 years ; of the 
Spanish War, 37.56 years. The 34,053 persons received 
pensions to the amount of $3,454,752.58 in charge of the 
superintendents; an average of $122.82, of which $786,- 
369.45 was paid to families and $2,624,419.53 to the pen- 
sioners themselves. The amount paid to state homes was 
$1,138,879.87. The state homes are inspected by officers 
of the National Home and reports are made to the board on 
their condition and management. The percentage of deaths 
to the whole number cared for rose from 0.655 ' m 1867 to 
6.351 in 1905. Of the 34,053 in the National Home 12,- 
374 had wives living, or minor children, or both, and 
21,679 were single. The National Home owns 5,308.50 
acres of land, valued at $345,231.51, and buildings valued 
at $9,401,651.68; total $9,746,883.19. The budget calls 
for $5,208,844 for 1907. 

How far do these military pensions act as pensions for 
workingmen? On this point it is difficult to secure exact 
information. Most of the present pensioners went into the 
army as volunteer soldiers when they were quite young, and 
immediately after the wars returned to their ordinary vo- 
cations, if they were not too much enfeebled by disease or 
crippled by wounds. They came from all forms of industry. 
In appointments to civil positions the veterans have always 
been favored. Since the great majority of the old soldiers 
came from manual occupations, it seems fair to presume that 

'Laws and Regulations, National Home for Disabled Volunteer 
Soldiers, 1906; Report of the Board of Managers of the National Home 
for Disabled Volunteer Soldiers, 1906. 



PENSION SYSTEMS OF THE UNION 277 

the military pension system has acted in great measure as 
a workingmen's pension system. Many of the old men and 
women who, in Europe, would be in almshouses are found 
in the United States living upon pensions with their children 
or in homes to which paupers are not sent, and they feel 
themselves to be the honored guests of the nation for which 
they gave the last full measure of devotion." 

The extravagance and abuses of this military pension 
system have probably awakened prejudice against working- 
men's pensions. The most severe criticism is based on the 
moral effects of having a secure income without saving or 
labor. Unquestionably some of the old soldiers have per- 
mitted themselves to live in idleness and vice because they 
were satisfied with a petty pension; just as numerous chil- 
dren of rich men are deprived of motive to struggle by the 
prospect of falling heir to wealth for which they render no 
equivalent. But most of the veterans did not thus ignobly 
decay in idleness. The vast majority of them returned to 
their occupations and made the most of the favorable oppor- 
tunities. Many were mutilated or enfeebled and so could 
not find and retain positions in competition with stronger 
men. Their idleness was enforced. The argument from 
occasional abuses does not go far. Rich men continue to 
prepare fortunes for their children, although they are often 
enough reminded of the danger, and children rarely refuse 
to accept legacies because of the moral perils. Our nation 
will never retreat from its liberal policy toward the brave 
defenders of its life merely because a few will pervert its 
gifts. Old-age industrial pensions are offered by many 
intelligent employers precisely because they tend to foster 
economic virtues, and surely this system would not produce 
an opposite effect by being made universal. If workmen 
contribute to the fund their thrift is cultivated. All depends 
on the wisdom of the method. 



278 INDUSTRIAL INSURANCE 

Other federal pensions. By the act of Congress of 
August 5, 1892, all women employed by the surgeon-general 
of the army as nurses during the Civil War, for a period of 
six months or more, and who were honorably relieved from 
such service, are granted a pension, provided they are unable 
to earn their own support. Under this law there were 624 
pensioners in the year ending June 30, 1902. 

Life-saving service. The only law providing relief in 
the nature of pensions in the life-saving service is that con- 
tained in sects. 7 and 8 of the act of Congress, approved May 
4, 1882. This provides that if any keeper or member of a 
life-saving or life-boat station shall be disabled by reason 
of any wound or injury received or disease contracted in 
the life-saving service in the line of duty, he shall be con- 
tinued on the rolls of service at full pay for a period under 
no circumstance greater than two years. A bill to provide 
for the retirement of and for pensions to those engaged in 
the life-saving work was introduced in both houses of 
Congress during the 58th session, but failed to pass on a 
tie vote. President Roosevelt has shown his interest in 
insurance of workers in many ways, and his message of 
December 5, 1905, contains an argument not only for 
members of a particular service but for all workers on small 
pay: 

I call your especial attention to the desirability of giving to the 
members of the life-saving service pensions such as are given to fire- 
men and policemen in all our great cities. The men in the life- 
saving service continually and in the most matter-of-fact way do deeds 
such as make Americans proud of their country. They have no 
political influence, and they live in such remote places that the really 
heroic services they continually render receive the scantiest recog- 
nition from the public. It is unjust for a nation like this to permit 
these men to become totally disabled or to meet death in the per- 
formance of their hazardous duty and yet to give them no sort of 
reward. If one of them serves 30 years of his life in such a position he 



PENSION SYSTEMS OF THE UNION 279 

should surely be entitled to retire on half pay, as a fireman or police- 
man does; if he becomes totally incapacitated through accident or 
sickness or loses his health in the discharge of his duty he or his 
family should receive a pension just as any soldier should. I call your 
attention with especial earnestness to the matter because it appeals 
not only to our judgment but to our sympathy, for the people on 
whose behalf I ask it are comparatively few in number, render incalcul- 
able service of a particularly dangerous kind, and have no one to 
speak for them. 

Civil service pensions. This subject has been long dis- 
cussed in the national legislature. In the year 1898 a bill 
was offered in Congress which was intended to provide a 
pension system for all civil servants of the federal govern- 
ment. Under this plan 2 per cent, of the monthly salary was 
to be retained and invested by the Secretary of the Treasury. 
Four years after the first payments were made, retirements 
were to begin with life annuities of 75 per cent, of the high- 
est pay at any time received by the retiring employee. Re- 
tirements after 2O-years' service were to be either voluntary 
or compulsory; voluntary after 60 years of age and 25 
years' service, compulsory after 70 years of age and 35 
years' service. The Civil Service Commission was to act as 
the retiring board. Opinion has been divided as to the wis- 
dom and fairness of this legislation. Advocates of the 
measure claim that experience in older countries teaches 
that the service would be improved because the employees 
could give themselves to their duties and could be dismissed 
without inhumanity when their power to work becomes too 
feeble for efficiency. Mr. Frank A. Vanderlip, who has 
had experience in high positions at Washington and is a 
banker of distinction, has thus expressed the argument in 
favor of civil pensions : 

With the exception of the United States, all the great powers of 
the civilized world pension their civil servants. The question of civil 
pensions in the United States is one which deserves serious considera- 



280 INDUSTRIAL INSURANCE 

tion. The full working out of the merit system can never be accom- 
plished until we recognize the principle of a pension for super- 
annuated government employees. It is doubtful if there are any men 
who have ever been charged with the responsibility of an appointive 
office in the government service who have not come to recognize that 
need, and who have not been won over to the belief that it would be 
an economy in government administration if a proper system of civil 
pensions were devised. 5 

The widows of the presidents of the nation have been 
pensioned by special acts of Congress. The widows of the 
following have been thus pensioned : James Monroe ( 1836), 
Abraham Lincoln, James K. Polk, James A. Garfield, 
Ulysses S. Grant, and William McKinley. Since these pen- 
sions were intended by the nation to mark a signal honor it 
can hardly be claimed hereafter that equitable pensions to 
workingmen, based on life service in productive toil, and 
on their own contribution to the fund, can be considered 
unworthy or pauperizing. 

Southern states. The subject would not be complete 
without mention of the pension systems of the southern 
states provided for the veteran Confederate soldiers. It 
was manifestly impossible after the Civil War to provide at 
national expense pensions for those who had taken active 
part in an armed attempt to destroy the Union. But it was 
entirely proper for the individual states to make honorable 
provision for those who had enlisted at the command of 
those states. Naturally the pensions voted by the im- 
poverished states have been modest in amount and have 
probably been more economically administered than the 
national pensions. Let Professor Glasson, an intelligent 
son of the South, 6 who has given special study to pensions, 
tell the facts and interpret them in his own way : 

6 North American Review, December, 1905, pp. 928, 929. 
6 See article by Professor William H. Glasson, in Review of Reviews, 
July, 1907, pp. 40 ff. ; cf. A. W. Butler, N. C. C., 1906. 



PENSION SYSTEMS OF THE UNION 281 

CONFEDERATE SOLDIERS' HOMES 

Not only has the South memorials and sentiment for the Con- 
federate dead, but also practical and generous care for the living. 
Everywhere aid is being extended to the surviving soldiers who are 
without means in their declining days. To relieve them from the 
stigma of depending upon charity and poor relief, liberal provision 
of soldiers' homes and of pensions has been made. Homes for aged 
and infirm Confederate soldiers are maintained by nearly all of the 
Southern States. These are of a similar usefulness though neces- 
sarily conducted on a much smaller scale to that of the homes for 
Union soldiers supported by the national government. An illustration 
of their work is found in the Jefferson Davis Memorial Home estab- 
lished in 1904 by the State of Mississippi at Beauvoir, the old home of 
the Confederate President. Up to January I, 1906, in persons had 
entered this home, 101 being veterans, nine wives of veterans, and 
two widows. Their average age at the date of admission was about 
seventy-one years. In the two years, there were twenty-one deaths, 
at an average age of seventy-three and one-third years. The Missis- 
sippi Division, United Daughters of the Confederacy, aided in inaugu- 
rating the home by providing the funds for the erection and fur- 
nishing of four buildings. The amount expended for the home in 
1906 was nearly $28,000. In connection with it, a hospital for the 
treatment of invalid soldiers has just been erected. 

North Carolina maintains a home for Confederate soldiers at 
Raleigh. The number of inmates in 1906 was 150, and $15,000 was 
appropriated for maintenance and $5,ooo for improvements. In 
Arkansas, the home has from eighty to eighty-five inmates, and for 
the two years, 1905 and 1906, there was expended in its support 
$37.850. Texas, in 1906, expended $86,000 for the support of a home 
containing 320 to 340 inmates. Virginia expended $35,000 for her 
soldiers' home in 1906. Florida maintains a home at Jacksonville. 
Similar work is being done by Georgia, Tennessee, Alabama, and 
other states. 

CONFEDERATE PENSIONS 

But the most substantial provision which the South has made for 
the veterans is that of pensions. The circumstances under which a 
Confederate pension system has been inaugurated in every Southern 
State are especially calculated to show the practical devotion of the 
South to the cause. After the war and the period of reconstruction, 
the South was ravished and exhausted. But with the first returning 



282 INDUSTRIAL INSURANCE 

conditions of prosperity, thought was turned toward making pro- 
vision for the needy and impoverished Confederate soldiers. Though 
the South was paying tens of millions in indirect taxation to the 
national government which was expended in pensions to Union soldiers, 
she did not hesitate to make her burden a double one. The payment 
of pensions to invalid Union soldiers was very generally accepted as 
one of the results of the war. But such acts as that of 1890, under 
which vast sums have been paid out to former Union soldiers who 
received no disability in war and who are perfectly able to support 
themselves in comfort, and often in luxury, have certainly worked a 
grave injustice to the South. In so far as the national pension system 
has come to be a means of distributing surplus revenue throughout 
the country, it has surely been exceedingly inequitable to the South. 
But her comparative poverty and the unjustly large sums taken from 
her for the national pension system have not deterred the States of 
the South from one after another inaugurating Confederate pension 
systems. And the money for these pension systems has not been 
raised by indirect taxation as are the revenues of the federal Govern- 
ment. Southerners have voted pensions, liberal for their means, when 
the pension tax appeared on the face of every man's tax bill. Will- 
ingness to vote pensions and constantly increase them under those 
circumstances indicates a popular and deliberate approval of the 
expenditure and a desire to make it, even on pain of doing without 
much needed improvements in schools, roads and other public institu- 
tions. 

THE GEORGIA PENSION SYSTEM 

Georgia is the Southern State which has the most liberal and com- 
prehensive pension system. From 1878 up to and including 1906 she 
has expended for this purpose $10,275,000, and her annual expenditure 
is now between $900,000 and $1,000,000, a great annual sum for a 
single State of the South. Since 1896 she has had at the head of her 
system a commissioner of pensions appointed by the governor, and 
the development of her system has been in many respects, though on 
a smaller scale, similar to that of the national system. She began by 
expending, in 1879, $70,580 for artificial limbs for disabled Confeder- 
ates. In 1889 she began paying regular pensions to disabled and 
diseased veterans. Pension provision was made in 1893 for the 
widows of Confederate soldiers whose husbands died in service, or 
after the war from disability or disease contracted in service. In 
1896 indigent Confederate soldiers were admitted to her pension list. 



PENSION SYSTEMS OF THE UNION 



283 



In 1902 a further extension of the pension laws was made for the 
benefit of indigent widows of Confederate soldiers, though the soldier's 
death had no connection with military service. The following table 
shows the number of each class and the amount paid in 1906 : 





Number 


Amount Paid 


Disabled soldiers 


2,8^3 


SlCQ QCQ 


Widows (death of husband of service origin) 
Indigent soldiers 


2,551 
7,734 


151,228 
4.63,080 




2,2IO 


132,<8o 








Totals.., 


1=1,207 


$007,747 



There may be some interest attaching to a comparison of the 
annual amounts paid by Georgia to Confederate pensioners having 
certain specific injuries incurred in military service with the amounts 
paid by the National Government to Union soldiers with similar disa- 
bilities resulting from actual military service: 





Georgia Con- 
federate 


Federal 


For total loss of sight 


$I<O 


$l 200 


For loss of sight of one eye 


3O 


144 


For total loss of hearing 


3O 


480 


For loss of a hand 


IOO 


360 


For loss of both hands or feet 


I ro 


I 2OO 


For total disability in one arm 


to 


432 


For incapacity to perform manual labor 


CQ 


760 


For loss of a thumb 


J^ 
(T 


jvv 
06 


For loss of little finger or little toe 


q 


24 


For loss of four fingers 


2O 


IO2 









To indigent Confederate soldiers who served at least six months 
during the Civil War Georgia allows $60 a year. Indigent widows 
of such soldiers also receive the same amount, as do also the widows 
of soldiers who died in the military service of the Confederate States, 
or from causes originating in that service. 

It is a matter of great regret that, like the federal system, the 
Confederate pension system of Georgia has been subject to abuses. 
From time to time these have been attacked in the newspaper press 
of the state. In 1902 the Georgia commissioner of pensions wrote in 
his report: "The pension rolls, under existing laws, are being bur- 
dened with men who never saw the enemy, and, in many instances, 



284 



INDUSTRIAL INSURANCE 



deserters. To allow such is a disgrace to the soldier and the state, 
and it is fastening upon the state a class of unworthy beneficiaries." 
On a smaller scale, the abuses that have sprung up in Georgia are 
exactly similar to those which have characterized the national system. 
For one who is acquainted with the history of the national system, to 
read of them is but the repetition of a sad but familiar story. Occa- 
sionally, complaints of the abuse of the pension system are heard in 
other southern states than Georgia. A newspaper of North Carolina 
a few years ago reported the state auditor as saying that the county 

The following table exhibits the growth of the Georgia pension list: 





Number 


Amount Paid 


1870 (for artificial limbs) 


i 888 


$7O ^80 


1887 (for artificial limbs) 


I I7O 


CO TQC 


1880 . 


2,004 


I^8,7QO 


j.wuy. 
l8OO 


9 Q?8 


183 d.1 ^ 


180? 


7 308 


4.26 34.O 


J> **yj) 

IQOO 


II <^8 


678 100 


IOCX 


I"\ 06 < 


go -} 060 


1006 


I ^ 207 


QO7 74.7 









of Burke paid to the state something over $4,000 in taxes and received 
over $5,000 in Confederate pensions. The county had at that time 
254 pensioners, and the county pension board had sent in at least 100 
more approved applications than were approved by the State Pension 
Board. Complaint was made that the disposition of a number of the 
county boards was to approve all the applications which came in, and 
that doctors were to be found who would give certificates of the 
required disability. 

PENSIONS IN OTHER SOUTHERN STATES 

In 1906 Alabama disbursed $462,732 to 15,147 Confederate pen- 
sioners. The pensioners of that state were divided into four classes, 
receiving respectively $60, $50, $40, and $30. There were 127 of the 
first class, 142 of the second class, 168 of the third class, and 14,710 
of the fourth class. The first class consists of those who are blind 
or have lost two limbs. Soldiers whose disability is not so serious 
are in the second, third, and fourth classes. Widows are in the fourth 
class. The system has grown so important that the state auditor, 
from whose office it is administered, recommends the creation of 
the office of pension commissioner. 



PENSION SYSTEMS OF THE UNION 



285 



Texas had 8,103 Confederate pensioners in 1906, of whom approxi- 
mately one-third were widows. She expended for them in that year 
$425,000. Her appropriation for pensions for the year ending August 
31, 1907, is $500,000. Louisiana provides artificial limbs for Confeder- 
ate veterans in need of them. Her pension system is administered by 
a State Board of Pension Commissioners. On February 15, 1906, she 
had 1,925 pensioners, for whom the annual appropriation was $75,000 
North Carolina, in 1906, had 14,400 Confederate pensioners on the 
roll, of whom 4,500 were widows. Her appropriation for pensions 
in that year was $275,000, but was increased to $400,000 for 1907. The 
pension roll of Arkansas was made up of 7,340 pensioners in 1906, 
and about 2,650 were widows. The amount distributed to these pen- 
sioners was $284,000. 

Tennessee has an invalid-pension law which divides the disabled 
soldiers into five classes, according to the nature of the disability. 
The amounts paid range from $300 per year for such injuries as the 
loss of both arms or legs to $60 per year for minor disabilities. 
There are now on her roll 3,899 of these invalid pensioners, at an 
annual cost of $290,000. She also provides pensions for widows of 
soldiers in two classes at $72 and $60 per year^ There are now 1,025 
of such pensioners, requiring an annual expenditure of about $65,000. 
The state now appropriates for its pension system $375,000 a year. 

The pension system of Mississippi provides for soldiers and sailors, 
their widows and servants. About $250,000 was paid to 7,863 pen- 
sioners in 1906. The maximum amount paid to a pensioner was $125 
and the minimum amount $28.30. Six classes of pensioners are pro- 
vided for by the law, and the amounts paid were as follows: 





Number 


Amount Paid 


First class 


114. 


$14 2^O 


Second class 


T.1& 


2C -3 CQ 


Third class 


14. 


I (XO 


Fourth class 


376o 


1 06 408 


Fifth class 


4.^7 


12 033 


Sixth class . . 


3 180 


80 004. 








Totals 


7 863 


$24.0 OS"? 









Virginia, Florida, and South Carolina also have Confederate pen- 
sion systems, for which they appropriate in the aggregate hundreds of 
thousands of dollars annually. In 1906 Virginia's appropriation was 
$346,000. Florida had about 3,200 pensioners on the roll in 1906 and 



286 INDUSTRIAL INSURANCE 

paid out in that year $294,000. Under the new Florida law pensions 
range from $100 to $150. South Carolina had 7,750 pensions in the 
same year and expended $198,000. Later information would probably 
show considerable increase in number of pensioners and in amounts 
appropriated in all of these States. 

Thus it has been shown that throughout the South the states are 
loyal to the surviving Confederate veterans, not as a matter of senti- 
ment alone, but that the loyalty has taken the very practical form of 
a loosening of purse-strings. Their generosity may occasionally be 
abused, but, notwithstanding this fact, the abuses by the unworthy few 
are not allowed to lessen the care for the worthy majority, and, with 
increasing prosperity, ever increasing liberality to the Confederate 
veterans receives the sanction of public opinion in all of the states 
that seceded from the Union in 1861. 

Conclusions. The result of this study of government 
pensions is that the federal and state governments have 
already accepted and acted upon the principle, to which 
they are fully committed, that those who have served the 
country in times of war shall be honorably provided for, 
without necessity of begging charity, during the period of 
invalidism and old age. In fact this is insurance for entire 
or partial disability caused by injury or disease in the service 
of the nation. On a similar ground rests the argument for 
pensions to men disabled in the dangerous life-saving ser- 
vice. For reasons of a different character the idea of pen- 
sions for civil servants of the nation has gained ground. 
The argument here rests chiefly on the fact that a pension 
will secure a higher order of service at less cost and also 
spare the people the humiliating spectacle of lifelong and 
faithful servants of a powerful and prosperous land begging 
their bread in invalidism and old age. But all these argu- 
ments apply with very great force to laboring men ; and the 
logic of the national conduct leads straight toward a uni- 
versal system of provision for disability due to sickness, 
accident, invalidism, old age, and death. It is for this 



PENSION SYSTEMS OF THE UNION 287 

reason that the facts cited in this chapter are so full of sig- 
nificance in a discussion of industrial insurance. 7 

7 Enemies of compulsory insurance (which should rather be called, as 
in France, "social insurance,") seek to obstruct its progress by calling it a 
form of poor relief, a "charity ;" and they deny it a place under the head 
of "insurance" because the beneficiaries do not pay all the premiums. 
The argument has no force, for the principle of insurance against a risk 
is unaffected by the fact that the person insured does not pay the 
premium. A man's relations may pay his life- or accident-insurance 
premium ; he is insured. Thus one of the highest authorities in the field 
says : "By insurance we understand an arrangement resting on mutuality 
for the purpose of making up loss of property through various chances 

which may be calculated Sometimes the beneficiaries receive on 

the basis of their own premium payments an additional sum from the 
payments of others. This fact does not take away from the arrange- 
ments its character as insurance Social insurance must be con- 
ceived of as insurance." Alfred Manes, Versicherungswesen, pp. 2, 15. 



CHAPTER XI 

PROTECTIVE LEGISLATION 

The employers' liability law, which has already been 
discussed, has been pressed as far as possible on the ground 
that it would tend to compel the employers to use devices 
for protecting workmen from accident by inflicting on them 
heavy damages in cases where injury could be traced to 
their negligence. Probably this law has had some influence 
in this direction, but how much it would be impossible to 
estimate. Such legal measures have limited influence for 
several reasons: (i) In the absence of a definite protective 
code the courts have no exact standard for measuring and 
fixing the degree of neglect of employers, and the employees 
themselves have no clear statement of their rights. Without 
factory inspection and particular requirements of law, 
there is no public record and publicity of injuries and fatal 
casualties in mines, mills, and factories ; and in the absence 
of specific codes even inspectors have no power to order 
specific changes in the equipment and machinery of work 
places. (2) Employers imagine and seem to believe, not 
without some ground in experience, that it is cheaper to 
pay indemnities occasionally or evade them by delay and 
litigation, than to introduce protective devices which have 
proved to be effective but which cost money. (3) When 
the employers have paid the premiums to casualty companies 
for insuring themselves against costs in damage suits they 
imagine they have no further financial reason for going to 
expense to prevent accidents beyond what is absolutely 
necessary; the insurance company carries the risk. (4) The 
employers' liability law does not cover occupational diseases 
but only accidents. 

288 



PROTECTIVE LEGISLATION 289 

In the purely agricultural occupations, especially before 
the general introduction of farm machinery, there was no 
demand for protective legislation. The employer shared all 
risks with his employees, if he had any wage-workers to 
assist him, and the employers' liability law was rarely in- 
voked. The dangers of the mines very early called for the 
attention of legislators in the states where deposits of coal 
and minerals were found; and the railroads became so 
destructive of limb and life that state and federal legislation 
was called for at the demand of employees and the public. 1 
The federal Congress has no power to make laws except 
for the District of Columbia and for interstate commerce, 
with modified control of territorial affairs. Hence we can- 
not expect to find uniform and consistent protective laws 
for all the states. Naturally the states in which manufactur- 
ing and mining industries developed earliest were the first 
to discover the need of public control and regulation of the 
conditions of labor. Massachusetts has been and still is 
one of the leading states in this field ; for there were happily 
combined a rapid development of industry and invention, 
an organization of trade-unions composed of intelligent and 
aggressive work people, and a general spirit of enlightened 
philanthropy. There also the British laws met with quick 
response and had great influence. Nearly in the same rank 

1 "One absurdity of our present law is that it says : A railroad brake- 
men cannot wholly be barred from compensation by the defense of 
contributory negligence, but a structural steel worker or a worker in a 
sewer (both in very hazardous employments) can be debarred from com- 
pensation by that defense. The reason for this is that the accidents in 
the railroad industry were the first to attract attention. But that other 
classes of accidents are now relatively more important is shown by the 
following analysis of Wisconsin Supreme Court cases involving claims 
by injured workmen against their employers. Before 1890, three- fourths 
were railway cases; since 1890, less than one-fourth are railway cases." 
Thirteenth Biennial Report of the Bureau of Labor and Industrial Acci- 
dents, Wisconsin, 1907-8, pp. in, 112. 



290 INDUSTRIAL INSURANCE 

came New York and Pennsylvania. But recently some of 
the states of the Middle West have come into the front rank. 
The chief difficulties in the way of the extension of pro- 
tective legislation even in industrial states are: the tradi- 
tional dislike of employers to have any kind of interference 
with their own absolute control of their business; intense 
dislike of state intervention with individual activity ; the con- 
stant assertion, often honestly made, that employers do not 
require the spur of law to make them care for the welfare 
of their employees ; the fear that legislation will lay burdens 
on manufacturers of a certain state which will cripple them 
in competition with manufacturers of other states; perhaps 
some greed for profits and dividends which dulls conscience 
and humanity in presence of preventable suffering and 
death; and the dread of political corruption in the office of 
factory inspector if he is armed with power to order ex- 
pensive changes and impose fines. Whatever be the causes 
the fact remains that associations of employers invade legis- 
latures when protective bills are offered, flood legislators 
with circulars calculated to bring the bills into contempt, 
use those devices which have effect with committees but 
which are very difficult for the public to discover, and by 
all arts finally defeat or mutilate the proposed legislation. 
In spite of these corrupt, selfish, or misguided attempts to 
hinder or prevent progress many of the employers actually 
do introduce many of the best protective devices and new 
laws are gradually coming to enactment. When the trade- 
unions and the public have worked out a consistent and com- 
plete social policy of protection and insurance it will be 
easy to secure further laws. At present in states where 
industry has been chiefly rural there is no educated public 
opinion on the subject and the conscience of the people is 
not directed against the abuses of our newer forms of 
economic life. If there were a careful and scientific code 



PROTECTIVE LEGISLATION 291 

of labor legislation, drawn by experts, it would have a 
better chance in the legislatures. 

In this chapter we shall give a brief analysis of the chief 
measures already in use and indicate by illustrations the 
direction of the movement at this time. Protective legisla- 
tion is an essential part of that social policy in which 
industrial insurance has a large place. The tendency of 
protective devices is to lower the cost of insurance, while the 
tendency of insurance is to offer a constant and ever-present 
motive to avoid injuries and diseases as well as to provide 
indemnity when injury is inevitable. The principle under- 
lying both movements is the social interest and duty to care 
for the welfare of citizens exposed through general condi- 
tions to suffering, loss, and death. 

I. THE PROTECTION OF ADULT WORKMEN 

Hours of labor. The duration of labor affects the 
health of workmen and their liability to accident, and so 
industrial efficiency, earning power, longevity, and culture. 
Up to this time legislation has not attempted to fix the 
length of the working day for men and women, except of 
late in specific employments where it is necessary to limit 
the strain of toil for the sake of health. The prevalent 
opinion still is that the rate of wages and the hours of labor 
of adults should be left to free contract between employers 
and employees, and to the play of competitive forces. At 
this point the trade-union helps nature by introducing col- 
lective bargaining and threats of strikes, and it is by the 
unions that reductions of the duration of labor have thus 
far been gained, aside from the working of interest and 
humanity in the minds of employers. Massachusetts found 
a way to shorten the working day of women within the 
limits of her rather liberal constitution; but the Supreme 
Court of Illinois voided a similar law on the ground of its 
unconstitutionally. 



292 INDUSTRIAL INSURANCE 

In the year 1898 the federal Supreme Court settled the 
principle that a state legislature may constitutionally enact 
a law limiting the hours of labor for adults when such limi- 
tation is necessary to preserve the health of the workmen in 
any particular occupation. This important decision has 
the effect to leave the state legislature free to diminish the 
day of toil when the form of labor is obviously injurious 
to health if too long continued. 2 The decision of the 
Supreme Court of the United States (February, 1908), in 
the case of Curt Muller vs. State of Oregon, settles the 
principle beyond further dispute. The case involves a law 
prohibiting long hours of labor for adult women in laundry 
work, and the counsel, Mr. Brandeis, based his argument on 
facts showing that long hours are dangerous to the health 
of women and injurious to their offspring and to the race; 
that the only way to prevent these evils was to require 
shorter hours by law; that this shortening of hours was a 
benefit to all members of society; that no economic disad- 
vantages would arise from the working of the law; that 
uniformity of law was essential to the efficient working of 
the measure and to justice to all employees in competition; 
and that a ten-hour day was reasonable. Henceforth the 
right of a state legislature to restrict working hours of adult 
women cannot be denied. 

The hours of labor per day for miners have been 
restricted by law as follows: Arizona, 8 hours; Colorado, 
8 hours in mines, smelters, or "other branches of industry 
or labor that the general assembly may consider injurious or 
dangerous to health, life, or limb" (constitution of state, 
adopted in 1902) ; Maryland, 10 hours, but contracting out 
is permitted; Missouri, in mines and smelting works, 8 

2 Supreme Court of the United States, February 28, 1898. Case of 
Holden vs. Hardy. Cf. F. Kelley, Some Ethical Gains through Legisla- 
tion, 1905, pp. 145, 280. 



PROTECTIVE LEGISLATION 293 

hours, no contracting out; Montana, mines and smelting 
works, 8 hours, no contracting out; Nevada, mines and 
smelting works, 8 hours, no contracting out; Utah, mines 
and smelting works, 8 hours (held to be constitutional: 
14 U. Rep. 71, 96; 18 Sup. Ct. Rep. 383 ; 57 Pac. Rep. 720) ; 
Wyoming, 8 hours. 

The hours of the labor day for employees of railroads 
and street railways have been restricted by laws of several 
states: Arizona, after 16 hours the workmen must have 9 
hours' rest; Arkansas, 8 hours' rest after 16 hours' service; 
California, street railway employees cannot contract to 
work over 12 hours; Colorado, 10 hours' rest after 16 
hours' service; Florida, 8 hours' rest after 13 hours' work; 
Georgia, 10 hours' rest after 13 hours' run; Indiana, 8 
hours' rest after 16 hours' work; Louisiana, 10 hours within 
12 hours, except in emergency, and no contracting out; 
Maryland, street railways, 12 hours, no contracting out; 
Massachusetts, street railways, 10 hours, except on holi- 
days; Michigan, railroads, 8 hours' rest after 24 hours' 
work; Minnesota, 10 hours, contract for longer hours per- 
mitted; Montana, 10 hours; Nebraska, 8 hours after 18 of 
service; New Jersey, street railways, 12 hours, except in 
emergency; New York, street railways, 10 hours, including 
one-half hour for dinner.; in brick making, 10 hours with 
right to contract for longer day; railroads, 10 hours, with 
8 hours' rest after 15 hours' work; Ohio, railroads, 8 hours' 
rest after 15 hours' work; Pennsylvania, street railways, 12 
hours; Rhode Island, street railways, 10 hours within 12, 
contracting out permitted; Texas, 8 hours' rest after 16 
of work; Washington, street railways, 10 hours, no con- 
tracting out. 

The following states have fixed the length of day for 
work on roads and other public works : 8 hours in Arkansas, 
California, Colorado, Delaware, Hawaii, Idaho, Illinois, 



294 INDUSTRIAL INSURANCE 

Indiana, Iowa, Kansas, Maryland, Massachusetts (8 or 9 
in cities), Minnesota, Missouri, Montana, Nebraska, Ne- 
vada, New Mexico, New York, Oklahoma, Oregon, Penn- 
sylvania, Porto Rico, South Dakota, Tennessee, Texas, 
Utah, Washington, West Virginia, Wisconsin, Wyoming. 
In South Carolina 10 hours is a legal day. In textile mills 
Georgia has made a legal day of 1 1 hours, with no contract- 
ing out except in emergencies. South Carolina has fixed 1 1 
hours a day or 66 a week, except for engineers, and no con- 
tracting out. 

In the absence of a contract the laws sometimes specify 
the hours of a day's work but leave the parties free to con- 
tract for a longer day. Thus the "legal day" is 8 hours in 
California, Connecticut, Illinois, Missouri, New York, Ohio, 
Pennsylvania, Wisconsin; it is 10 hours in Florida, Maine, 
Michigan, Minnesota, Nebraska, New Hampshire, Rhode 
Island, Maryland. In New Jersey it is 55 hours in a week, 
between 7-12 forenoon and 1-6 afternoon; Saturday, 7-12 
in factories and shops and 60 hours in bakeries. Agri- 
cultural laborers and domestic servants are not protected by 
these laws. The employees of the federal government, in 
the public printing office, laborers on public works, and 
letter carriers have an 8-hour day. Apparently the tendency 
is generally toward an 8-hour day. 

2. Weekly day of rest. Legislation is no doubt much 
influenced by traditional religious beliefs and customs, as 
well as by the desire for culture, recreation, and sociable 
converse; but the primary and decisive legal ground is the 
conservation of the health of the workmen. The laws are 
monotonously uniform in the states, although some of them 
are notoriously dead letters, as those governing barbers and 
amusements in the large cities. The general formula is 
that all labor and trade are forbidden on Sunday, works of 
necessity and charity excepted: thus Alabama, Arkansas, 



PROTECTIVE LEGISLATION 295 

Connecticut, Delaware, Alaska, District of Columbia, 
Florida (newspapers excepted), Georgia, Hawaii, Illinois, 
Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Mary- 
land, Massachusetts, Michigan, Minnesota, Mississippi, 
Missouri, Nebraska, Mexico, New York, North Carolina, 
North Dakota (games and sports included), Ohio, Okla- 
homa (games included), Oregon, Pennsylvania (games 
included), Porto Rico, Rhode Island (games included), 
South Carolina, South Dakota (games included), Tennes- 
see, Texas, Utah, Vermont, Virginia, Washington, West 
Virginia, Wisconsin, Wyoming. It is expressly provided 
in some states and generally understood, that Jews, Ad- 
ventists, and others whose religious beliefs require them 
to observe Saturday as a day of rest are permitted to 
work on Sunday, as in Arkansas, Connecticut. Cali- 
fornia, Missouri, and Pennsylvania have laws securing 
a weekly day of rest even if it cannot fall on Sun- 
day. Special laws forbid the barbers to keep their places 
open all or part of Sunday; as in Colorado, Delaware, 
Illinois, Kentucky, Maryland, Michigan, Minnesota, Mis- 
souri, Montana, New York, North Dakota, Ohio, Tennes- 
see; but these laws are rarely enforced. Railroads are 
restricted to necessary trains, sometimes under regulations 
of commissioners: Connecticut, Georgia, Massachusetts, 
North Carolina, South Carolina, Vermont. 

3. Protection against accident and disease. The law of 
Massachusetts requires all poles of electric light companies 
to be insulated and the inspector of wires enforces the law. 
In the building industry, which with steel construction and 
"sky scrapers" becomes ever more dangerous, the laws of 
a few states provide some protection by prescribing the 
kinds of scaffolding, protecting floors, shafting, hoisting 
apparatus, etc. : California, Indiana, Maryland, Massa- 
chusetts, Minnesota, Missouri, New York, Ohio, Pennsyl- 



296 INDUSTRIAL INSURANCE 

vania, Wisconsin, and a recent law of 1907, in Illinois. 
The law of New York is elaborate and carefully drawn. 
Employees on street railways are protected by regulations 
prescribing the inclosure of platforms for drivers and 
motor men to shield them from rain and snow and cold in 
winter months : Colorado, Connecticut, Illinois, Iowa, Kan- 
sas, Massachusetts, Michigan, Minnesota, Missouri, Ne- 
braska, New Hampshire, New York, North Carolina, 
Tennessee, Texas, Utah, Virginia, Washington, West 
Virginia, Wisconsin. The very language of all these laws 
is uniform, probably showing that the national union of 
street railway employees has secured the enactment of this 
desirable protection by a concerted movement, and that the 
national convention of factory inspectors has promoted 
uniformity. 

The following states have enacted laws prescribing the 
use of fire escapes in connection with workshops and pro- 
viding agencies for enforcing the law : Connecticut, Dela- 
ware, District of Columbia, Georgia, Idaho, Illinois, Indiana, 
Iowa, Kansas, Louisiana, Maine, Maryland, Massachusetts, 
Michigan, Minnesota, Missouri, Nebraska, New Jersey, New 
York, North Dakota, Ohio. The requirements include iron 
ladders on the outside of the wall, doors to open outward, 
red lights to direct to exits, and fire extinguishers at con- 
venient places. The laws of New York, Ohio, and Wis- 
consin are examples of carefully drawn statutes. Even 
when the law is good much will depend on its enforcement 
by a sufficient corps of competent and faithful inspectors. 

Railroad safety appliances. The number of employees 
injured and killed on trains and tracks is so great as to 
excite general interest and secure legislation. In the case 
of railroads which transport passengers and goods from 
state to state the federal Congress has used its constitutional 
right to make laws, and the code of interstate traffic is a 



PROTECTIVE LEGISLATION 297 

model for the several states. The chief matters thus brought 
under regulation are: power brakes, automatic couplers, 
grab irons, draw bars, blocking of frogs to prevent catching 
the feet between rails, tell-tales or warning signals before 
bridges. The following states have enacted laws making 
regulations for local roads : Colorado, Connecticut, Dela- 
ware, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, 
Massachusetts, Michigan, Minnesota, Mississippi, Missouri, 
Nebraska, New Hampshire, New York, Ohio, Rhode 
Island, South Carolina, Texas, Vermont, Virginia, Wash- 
ington, Wisconsin. 

Reports and investigation of accidents. Publicity of 
accidents is desirable to promote wise legislation and 
awaken public sentiment against negligence of employers 
and corporations. This is provided for by the federal law 
which requires all common carriers to report to the Inter- 
state Commerce Commission each month all casualties. 
Various states require reports, coroners' inquests of fatal 
accidents, and careful investigation of the causes of injuries; 
as Alabama, Connecticut, Massachusetts, New York, South 
Carolina, Vermont. Recent legislation in Wisconsin and 
Illinois gives promise of favorable results in this field. 

Protection of agricultural laborers. Apparently only 
three states (Illinois, Iowa, and Wisconsin) have begun to 
make laws on this subject, in spite of the fact that dangerous 
machinery is used on a vast scale in the rural occupations. 
In the states named the law requires the owners of threshing 
and shelling machines which are run by horse or steam 
power to provide for them proper protective guards. 

Inspection of steam boilers. The laws on this subject 
are of unequal value. The inspection is sometimes com- 
mitted to state officials and sometimes to local authorities. 
The legal regulations in the better laws give minute direc- 
tions for testing the boilers by hydrostatic pressure, the 



298 INDUSTRIAL INSURANCE 

tension required, gauge cocks, safety valves, fusible plugs, 
qualifications of engineers, etc. The following states have 
made laws on this subject : Colorado, Connecticut, Florida, 
Indiana, Iowa, Maine, Missouri, Massachusetts, Michigan, 
Minnesota, New York, Ohio, Pennsylvania, Vermont. 

Mine regulations. The principal points guarded in 
these laws are ventilation of mines, testing the air. provi- 
sions of stretchers and blankets, bandages, etc., in case of 
injuries, exits in the walls, supporting timbers for the roof, 
safety lamps, escape shafts, maps of mines, secure cages and 
elevators, and signals. It is a general principle that accidents 
must be reported and investigated. The following states, 
besides the federal government, have enacted codes of mine 
regulations: Alabama, Arkansas, California, Colorado, 
Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky. Man-land, 
Michigan, Missouri, Montana, Nevada, Ne\v' Jersey, Xew 
Mexico, New York, North Carolina, Ohio, Oregon, Penn- 
sylvania, South Dakota, Tennessee, Texas, Utah, Washing- 
ton, West Virginia, Wyoming. The law of Pennsylvania 
is quite elaborate since the conditions of the anthracite and 
the bituminous mines are quite different. The laws of New 
York, Illinois, and Indiana may be studied as types of 
carefully drawn regulations. 

II. THE EMPLOYMENT OF WOMEN 

The general doctrine governing the employment of 
adult women is that sex is no disqualification for occupation ; 
a woman is free to make a contract for work and wages 
equally with a man. This principle is distinctly affirmed in 
the laws of California, Illinois and Washington. Thus the 
constitution of California (Art. 20, Sec. 18) says: "No 
person shall, on account of sex, be disqualified from enter- 
ing upon or pursuing any lawful business, vocation, or 
profession." This principle does not carry with it the duty 
of serving on police or jury or in the army, nor the right of 



PROTECTIVE LEGISLATION 299 

suffrage or holding public office, unless there is express legal 
provision. But this doctrine must be further modified when 
health, decency, and morality are in danger ; and so we have 
specific limitations and prohibitions of the occupations of 
women. Some employments are entirely closed to women. 
Thus women and girls are prohibited from employment 
where intoxicating liquors are sold: in Alaska (Act of 
Congress), Iowa, Louisiana, Maryland, Michigan, Missouri, 
New Hampshire, New York, Vermont, Washington. Some- 
times the wife or daughter of the barkeeper may be ex- 
cepted from the prohibitory rule. The employment of 
women and girls in and about mines, except in offices, is 
generally forbidden, as in Pennsylvania and Alabama. 

Various laws, apparently passed in consequence of a 
general movement of women's clubs throughout the country, 
uniform in language, are designed to insure suitable sur- 
roundings and conveniences for women workers. Thirty- 
two states have laws requiring seats for female employees 
in mercantile establishments and factories, and their use 
must be permitted for rest when the women are not actively 
engaged in an occupation which prevents them from sitting 
down. Separate washing and dressing rooms and water- 
closets must be provided. Rooms must be kept comfortably 
warm in cold weather. Abusive, profane, and indecent 
language and all improper treatment are forbidden (laws of 
Delaware, Indiana, Louisiana, Ohio, Tennessee, Nebraska, 
Oregon, Washington). 3 

Massachusetts, with its enlightened social policy and 
liberal constitution, provides that no woman can be employed 
in a mercantile establishment more than 58 hours a week, 
except in emergencies, nor in a manufacturing establishment 
more than 10 hours a day, or 58 hours a week, with similar 
exceptions. The supreme court of the state has approved 

* Curt Mailer vs. Oregon, see above. 



300 INDUSTRIAL INSURANCE 

this law (120 Massachusetts 383). Illinois passed a similar 
law, but it was made void by its supreme court. The law 
of Colorado forbids the employment of women of 16 years 
of age or more during more than 8 hours in 24, when the 
occupation requires her to stand on her feet. The limit 
is fixed at 10 hours in North Dakota, Oklahoma, Rhode 
Island, South Dakota, Virginia, Louisiana, New Hamp- 
shire, Connecticut, Oregon, Washington, Nebraska; at 8 
hours in Wisconsin. In New York women between 16 and 
21 years may not work over 60 hours in a week; in Penn- 
sylvania, 12 hours a day, but not over 60 hours in a week. 
Indiana forbids women to work in factories between 10 
p. M. and 6 A. M. Massachusetts and Nebraska have the 
same rule. In New York the prohibited hours are between 
9 P. M. and 6 A. M. 

III. CHILDREN 

While legislatures and courts in the United States have 
been slow to interfere with the right of contract and the 
control of work places by employers so long as adults only 
are concerned, they have been led to take a different view 
of 'the duty of the state in relation to children and minors. 
Here the failure of the laissez-faire policy is too obvious to 
ignore, and even the ancient English law required children 
as objects of particular concern of certain courts. 

Very generally there are statutory prohibitions, sup- 
ported by penalties and enforced by inspectors, against the 
employment of children in public exhibitions and in occupa- 
tions dangerous to health and morals, as mendicancy, 
acrobatic and immoral employments. Such laws have been 
enacted in California, Colorado, Connecticut, Delaware, 
Georgia, District of Columbia, Illinois, Indiana, Iowa, 
Kansas, Kentucky, Louisiana, Maryland, Massachusetts, 
Michigan, Minnesota, Missouri, Montana, New Hampshire, 
New Jersey, New York, Ohio, Pennsylvania, Porto Rico, 



PROTECTIVE LEGISLATION 301 

Rhode Island, Virginia, West Virginia, Wisconsin, Wyom- 
ing. Employment of children in bar-rooms and other places 
where intoxicants are sold is forbidden by law in Connecti- 
cut, Alaska (Act of Congress), Georgia, Missouri, Massa- 
chusetts, South Dakota. Work in mines is universally 
known to be dangerous to children and the laws of the 
following states prohibit work of boys (as well as of 
females) in mines, the age being fixed at 12 or 14 years: 
Alabama, Arkansas, Colorado, Illinois, Indiana, Missouri, 
Pennsylvania (16 years in mines, 14 outside), Utah, Wash- 
ington, West Virginia, Wyoming. There is a marked 
tendency to regard it as improper to permit the employment 
of children and youth in factories and mercantile estab- 
lishments at the sacrifice of elementary education. The 
most advanced position is taken by those states which 
positively prohibit the work of children under a certain age 
and require their parents and guardians to keep them in 
school if the public schools are in session. Thus in Massa- 
chusetts children must attend school from the seventh to 
the fourteenth year. In Montana children must attend 
school from the eighth to the fourteenth year, not less than 
1 6 weeks in the year. In the enforcement of these laws a 
difficulty has been met: there are families so poor that the 
earnings of the children seem to be required to supply the 
wants of the family. This difficulty has been met in some 
states in a way which seems disgraceful by giving poor 
widows and incapable fathers permission to keep their chil- 
dren out of school and take their earnings. This is the 
law in Texas for children 12 to 14 years of age. Other 
states find the same difficulty but overcome it in more 
honorable fashion they provide material relief for the 
family and do not permit the child to bear the sacrifice ; thus 
Indiana and Ohio. Private charity sometimes intervenes. 
Even after school age, usually 14 to 16, if the young 



302 INDUSTRIAL INSURANCE 

person is still unable to read and write English, he must in 
some states either attend the evening schools, or attend the 
day schools until he acquires a certificate of proficiency; 
thus Washington, New Hampshire, Maryland, Massa- 
chusetts, Michigan, Minnesota, Montana, Connecticut, 
Maine. 

Permitted child labor is subject to regulation to prevent 
abuses. Thus in New York there is a carefully devised code 
(Labor Laws, p. 825) which prescribes that annual licenses 
must be given to children who are permitted to engage in 
street trades. 

Age limit. Rather slowly but with sure step legislation 
moves forward in the direction of preventing the exploita- 
tion of the vitality of young children by premature labor. 
There is a gradation in the prohibitions ; for young children 
work in factories and mercantile establishments is usually 
altogether forbidden ; for young persons it is permitted with 
various restrictions. The children under 12 years are 
simply forbidden to work in factories and mills; as in 
California, Maine, Maryland, New Hampshire, North 
Carolina, Wisconsin. Children under 12 are forbidden to 
work unless their parents are very poor, as in Alabama, 
Texas, Arkansas; but even there children under 10 cannot be 
excepted. In Minnesota the age is 14 years, but children of 
dependent parents may be licensed to work. In Rhode 
Island all labor under 12 is forbidden. In South Carolina 
12 years is the limit. In Louisiana boys cannot work under 
12 nor girls under 14 years; in Pennsylvania, 13 years; in 
Massachusetts, Indiana, New York, Michigan, New Jersey, 
Ohio, Oregon, it is 14 years. Children are forbidden to 
work while public schools are in session in Illinois, South 
Dakota (8-14 years), Vermont (15 years), Washington 
(15 years), Wisconsin (12-14 years). Young persons 
from 1 2-1 6 years may work under regulations, as in Cali- 



PROTECTIVE LEGISLATION 303 

fornia, if they have certificate of age and education. In 
Massachusetts those between 14-16 years must be certified. 

The hours of labor are restricted by law: in Alabama, 
under 12 years, 66 hours a week; Arkansas, under 14 years, 
60 hours a week; California, under 18 years, 54 hours a 
week; Illinois, under 14 years, 8 hours a day under 16 
years, 48 hours a week; Indiana, under 16 years, 60 hours 
a week; Louisiana, under 18 years, 10 hours a day; Maine, 
females under 18, males under 16, 10 hours a day; Minne- 
sota, under 14 years, 10 hours a day; New York, under 16 
years, 9 hours a day; under 18 years, 60 hours a week; 
North Carolina, under 18 years, 66 hours a week; Oregon, 
under 16, 10 hours a day, 6 days; Wisconsin, under 18 
years, 8 hours a day. 

Night work of children. Children of 13-15 years are 
not to work between 7 p. M. and 6 A. M. in Alabama, 
Arkansas, Illinois, Massachusetts, Michigan, Ohio, Oregon. 
In New York the law forbids children under 16 years from 
working between 9 P. M. and 6 A. M.; in South Carolina 
children under 12 may not work between 8 P. M. and 6 A. M. 
In Texas children 12 to 14 years may not work between 
6 P. M. and 6 A. M. Minnesota requires a certificate of 
physical fitness for work a principle which is influential 
in the discussion and legislation of other states. The inade- 
quacy of the age test alone is generally recognized. 4 

IV. FACTORY INSPECTION 

No protective law is self-enforcing, and it is evidence of 
moral insincerity or ignorance in a legislature to pass a 
code of regulations without providing money and organiza- 
tion for competent inspection of work places. The majority 
of employers in all countries, as a rule, will not voluntarily 
execute a law which casts on them a financial burden and 

4 See Josephine Goldsmith, Child Labor Legislation, Handbook Na- 
tional Consumers' League, 1908. 



304 INDUSTRIAL INSURANCE 

trouble, and employees are everywhere afraid to complain 
for fear of discharge from employment. As might be 
expected from what has already been said, there is no 
general system of regulation and inspection common to all 
the states. Yet one can discover considerable similarity and 
even identity of language in the laws. The older states 
copied many provisions from the British laws and the newer 
states imitated these. In the volume of Labor Laws which 
is here used for data we observe the greatest differences in 
extent of provisions, from the elaborate codes of New York, 
Massachusetts, Pennsylvania, down to the statute of Nevada 
whose sole contribution seems to be the requirement that 
set screws must be countersunk! Sometimes the statute 
makes a rigid requirement and leaves it to benevolent em- 
ployers to interpret and apply at their discretion, and some- 
times the office of inspector is created without giving the 
partisan appointee any serious duties to perform. Probably 
it is expected in such cases that the "County Chairman" will 
keep him busy at patriotic tasks ! In the purely agricultural 
states, rapidly diminishing in number, the need for regula- 
tions is not widely felt; but factories are rapidly springing 
up everywhere and control becomes imperative. Factory 
inspectors are appointed in the following states : California, 
Connecticut, Delaware, Illinois, Indiana, Kansas, Kentucky, 
Maine, Missouri, New Jersey, New York, Ohio, Pennsyl- 
vania, Rhode Island, Tennessee, Washington, West Vir- 
ginia, Wisconsin. Mine inspectors are appointed in 
Alabama, Arkansas, Colorado, Idaho, Illinois, Indiana, 
Iowa, Kansas, Kentucky, Maine, Maryland, Michigan, 
Missouri, Montana, New Jersey, New York, North Caro- 
lina, Ohio, Pennsylvania, South Dakota, Tennessee, Utah, 
Washington, West Virginia, Wyoming, United States (fed- 
eral laws). There are railroad inspectors in Massachusetts, 
Michigan, Ohio, Washington. 



PROTECTIVE LEGISLATION 305 

Since it is impossible to describe in this place all the 
forms of organization, we may select New York as one of 
the most highly developed and specialized. By law a depart- 
ment of labor was created, over which is placed a commis- 
sioner of labor appointed by the governor by and with the 
advice of the senate. The commissioner of labor has the 
powers and duties belonging to the offices of factory in- 
spector, labor statistics, and mediation and arbitration, and 
three bureaus exist for these three objects. The immediate 
direction of the bureau of labor statistics is lodged with 
a deputy commissioner, while another deputy commissioner 
has charge of the bureau of factory inspection. The com- 
missioner of labor, with the aid of the deputy named, is 
required to collect, assort, systematize and present in annual 
reports to the legislature statistical details in relation to 
commercial, industrial, social, and sanitary conditions of 
workingmen and productive industries in the state. Em- 
ployers are required by law to furnish information desired. 
A free public employment bureau is under the charge of 
the commissioner of labor in several cities of the state. The 
factory inspector may appoint not more than fifty persons 
as deputy factory inspectors, not more than ten of whom 
shall be women, and these may be removed by him at any 
time. The salary of the deputy factory inspector is $1,200. 
Special deputies are appointed to inspect bakeries and mines. 
It is the duty of the inspectors to visit factories as often as 
practicable and to enforce the laws. Any lawful municipal 
ordinance relating to factories shall be enforced by the state 
inspectors. The salary of the commissioner is $3,000 and 
of his two deputies $2,500 each; but the positions may 
change with party or factional changes and there is little 
prospect for a professional career. If an employer violates 
the law the inspector lays complaint before the county 
attorney, with all the proofs, and it is the duty of the 



306 INDUSTRIAL INSURANCE 

attorney to prosecute. In certain cases the inspector is 
authorized to accept arrangements which he regards as 
equivalent to those named in the law ; for example, the fire 
escape in a factory may be of any kind which in the judg- 
ment of the inspector is reliable and sufficient for its purpose. 
The inspector of a bakery may determine the method of 
drainage and ventilation in a building. The department can 
make regulations for the security of miners in coal mines 
and quarries. An employer who tries to hinder an inspector 
is liable to punishment. Supervision of home industries in 
making clothing belongs to boards of health, while work- 
men on railroads are under the care of railroad commis- 
sioners. The inspection of steam boilers in the city of 
Greater New York is under the charge of the police auth- 
orities. This' board is empowered to appoint inspectors and 
make regulations. 

Similar provisions were recommended to the legislature 
of Illinois at the last session in 1907, but rejected, for the 
most part, chiefly on the ground that the law gave too much 
authority to the factory inspector. In America, where the 
"spoils system" is still at work with corrupting influence, 
the factory inspector is feared by employers not only be- 
cause he is tempted to enforce the law too rigidly but 
because custom makes bribes and blackmail only too 
frequent. 

In 1908 the legislature of New York placed the inspec- 
tion of mercantile establishments under the Department of 
Labor, in a Bureau of Mercantile Inspection. It had been 
found that control by local boards of health was ineffective. 5 

6 Special studies, with historical background, are F. R. Fairchild, 
History of Labor Legislation in New York; Alba M. Edwards, The Labor 
Legislation of Connecticut ; J. K. Towles, Factory Legislation in Rhode 
Island; these in Vols. VI (1905), VIII (1907), and IX (1908), of "Publi- 
cations of American Economic Association." 



CHAPTER XII 
SURVEY AND OUTLOOK 

There are already, as we have seen in the preceding 
chapters, various systems of industrial insurance in the 
United States which witness to the universal sense of need 
of such protection even among those workers who have 
least developed habits of thrift. These imperfect and un- 
related schemes are yet to be developed, co-ordinated, 
regulated, and combined so as to form a consistent, com- 
prehensive, and adequate system. The hope of progress 
lies in these germinal beginnings, and the problem im- 
mediately before the nation is one of synthesis. Evolution 
does not make great leaps, for even the "sports" which 
figure in the "mutation theory" of DeVries are closely akin 
to the parent stock. 

Is universal insurance an economic possibility? A com- 
plete answer to this question would require extended 
discussion. A few things may be suggested. The profit 
fund could carry a very large share of the burden, as shown 
by the fact that employers are marvelously prosperous, and 
by the fact that even now, though in a very uncertain way, 
they set apart a vast sum for helping workmen in times of 
disability in the form of contributions to sickness funds, 
hospitals, physicians, and gifts to families in distress, not 
to speak of taxes for public relief and enormous costs for 
casualty insurance and litigation, which is now waste. The 
wages fund could bear a much heavier drain for insurance 
if we can judge from the immense sums spent by workmen 
for objects which are destructive to health and morals. It 
is true that the unskilled workmen have no margin for 
adequate insurance, and those who cannot supply even the 

307 



308 INDUSTRIAL INSURANCE 

immediate necessities of existence can hardly be expected to 
provide for the future without help from the profit fund and 
from consumers. 

Systems and schemes of industrial insurance. (i) The 
workingmen have themselves created organizations for 
insurance, and thereby express a universal sense of need of 
this protection; local mutual benefit societies, with or with- 
out aid from employers, national brotherhoods or fraternals, 
and trade-unions with local branches. (2) Employers have 
promoted the movement by various methods : local societies 
of employees, insurance departments of great firms or cor- 
porations, contracts between firms and casualty companies, 
pension schemes of employing corporations. (3) Private 
insurance companies which sell sickness and accident insur- 
ance to workmen, "industrial insurance companies" collect- 
ing small premiums weekly or monthly, and furnishing 
chiefly burial benefits to the low-paid workmen, and regular 
life insurance to those who have higher wages. (4) Or- 
ganizations of municipal, state, and federal employees for 
pension funds, as those of teachers, firemen, policemen ; the 
national and state military pensions; homes for invalid 
veterans. Here also may be counted as auxiliary and supple- 
mentary government activities, poor relief, liability laws, 
protective factory laws and inspection, and state supervision 
of fraternal societies and insurance corporations. Every 
one of these agencies and organizations represents some 
beginning of a movement toward obligatory insurance. The 
cities have already recognized their duty to care for the 
policemen, firemen, and teachers; and it will be difficult to 
answer the question of other employees of cities, many of 
them far more in need of protection, why they should not 
be included. The nation and the states have already de- 
clared it to be our duty to shelter the aged and wounded 
soldier, why should the victims of the "army of labor" be 



SURVEY AND OUTLOOK 309 

neglected? They also have served their country in occupa- 
tions even more dangerous and destructive than war, and 
quite as useful. Public poor relief has already acknowl- 
edged the duty of the community to support its members 
who are incapable of labor; but experience has taught that 
this method tends to humiliate and degrade the recipients 
and it is manifestly better from every point of view to 
prevent the need of appeal to poor relief by creating an 
insurance fund, so far as this is possible. 

The employers' liability laws recognize in a restricted 
field the principle that the responsible managers of business 
should indemnify employees for injuries due to the occupa- 
tion, that is, so far as the employer is responsible for the 
injury. Perhaps 10 to 15 per cent, of the cases of injuries 
in occupations are theoretically covered by this legal device. 
The trade-unions are seeking by all means in their power, 
and supported by the humane feelings of the people, to make 
this law more and more drastic; and at least some of the 
courts, with their elective judges dependent on the votes 
of the workmen, are more and more inclined to make this 
law practically not only compensatory but even punitive in 
its working. The result in increasing numbers of cases 
is wrong to the employer. The juries, wherever the case 
is decided by them, are inclined to give the employee the 
benefit of the law to the full extent. On the other hand, the 
employers are compelled to pay heavy premiums to protect 
themselves against an artificial risk created by the law itself, 
and these premiums are already a charge on the cost of 
production and levied in the prices of commodities upon 
the consumer. The intervention of a casualty company 
under these conditions not only widens the breach between 
employers and employees, but it tends to make the insuring 
companies, who are doing a legitimate business, exceedingly 
hated by the employees and their friends. This conflict 



310 INDUSTRIAL INSURANCE 

tends to lower the efficiency of labor, the productivity of 
capital, and to crowd the courts with damage suits which 
obstruct ordinary business of courts. The time seems ripe 
for a change of the law. Logically, factory laws and 
protective legislation generally lead to industrial insurance. 
If it is proper for the state to require employers to prevent 
preventable accidents, then it is a rational function of gov- 
ernment to secure indemnity for loss of earning power 
caused by occupations. Up to this time it cannot be said 
that American states have any definite "social policy." 
Legislation has been modified here and there by the modern 
conception that the state owes certain duties toward those 
who are in an economic position of dependence; but this 
progress has been gained in spite of the ruling social phil- 
osophy of individualism. Outside of the poor law and the 
employers' liability law, with certain factory regulations, 
the law has offered to the working man chiefly empty 
formulas about liberty of contract which had no economic 
content to fill their phrases with real meaning. Why have 
the states been so slow to enter the modern path of a genu- 
ine "social policy," in which the welfare of those in a semi- 
dependent economic position has been made the distinct 
object of public care? The employers' liability laws, the 
poor relief laws, and the public schools are indications of a 
growing belief in the right direction, but the logic of such 
organizations is not clearly recognized and appreciated. The 
reasons have already been discussed. Free land, to be had 
for asking and taking, has until recently offered to any man 
who did not wish to be in a subordinate position the oppor- 
tunity of becoming a landlord and a capitalist, taking the 
risks of life on his own account; and hence it was thought 
America had forever escaped the formation of an "industrial 
group" whose members were to remain, and their children 
after them, in the situation of persons living day by day on 



SURVEY AND OUTLOOK 311 

daily wages. Individualism ruled our ethics, economics, 
theology, legislation, courts, and politics. The strife be- 
tween trade-unions, f raternals, and profit-seeking insurance 
corporations has, perhaps, prolonged the difficulty of form- 
ing a unified public policy. One great difficulty in the way 
of obligatory and universal insurance lies in the fact that 
our central government has so limited constitutional powers 
in this field, ^ The manufacturers of Massachusetts opposed 
the compensation bill proposed in their legislature on the 
ground that it would handicap them in competing with 
manufacturers of other states. It is a long and weary way 
to unified and harmonious legislation to secure it by con- 
ference and agreement; the commissions appointed to 
promote uniform legislation have only advisory powers. 
There is no prospect that a constitutional amendment per- 
mitting Congress to enact a national insurance law could 
be secured. Congress has already exercised its constitu- 
tional powers in the field of interstate commerce by enacting 
rather drastic liability law for railroads, with results still 
in question, and certainly not satisfactory to any party in- 
volved. Dr. Zacher (Heft XVI of his Arbeiterversicherung 
im Auslande, p. 6) has said of European countries what is 
applicable with full force to the United States: 

A survey of the tables of statistics in the Guide to Workingmen's 
Insurance in the German Empire, which exhibits the plans and results of 
industrial insurance in European countries, shows one immediately 
that those lands have approached most nearly the ideal of care for all 
working people which have committed themselves to compulsory insur- 
ance. With compulsory insurance laws the end is reached in a com- 
paratively short time; while even with state subsidies voluntary plans 
have failed to help a part of the population imperfectly and those 
who most need the protection of insurance not at all. 

Our problem is essentially the legal question: how can 
we introduce obligatory insurance in this country without 



312 INDUSTRIAL INSURANCE 

conflict with our written constitutions and with the tradi- 
tions of the courts? 

The problems of organization and administration might 
be difficult, but they would not be insoluble if the legal way 
could be opened. As all acknowledge, American institutions 
have shown a wonderful power to adapt themselves to new 
social demands and the inventive talent of the people goes 
into administration. Life in contact with nature made the 
pioneers ready to confront new situations without much 
regard for unfit precedents, and their spirit is not dead. 
As for courts, we have in the county courts, whose judges 
are chosen directly by the people, a popular, fair, trusted, 
and capable agency for deciding many of the questions which 
would arise in the interpretation and application of a new 
law. Their records would have public faith and their 
quarters would be convenient for the archives of agree- 
ments and statistics. Our experience with the new juvenile 
courts proves that our judiciary can easily rise above the 
routine of meaningless procedure when occasion requires 
and their hands are free. From early times various public 
duties have been assigned to local courts, as supervision of 
prisons and jails, poorhouses, and semi-philanthropic func- 
tions; and it would not be an absolute novelty if they were 
given some- supervision over the judicial management of 
insurance business requiring regularity and legal instruc- 
tion. A rational insurance law would clear the dockets of 
a vast amount of hopelessly confusing damage suits and 
make room for the far more satisfactory and easy business 
of mediating without process in applying the principles of 
insurance. This would be a noble social function for 
judges. 

Each state has already its insurance department which 
has supervisory and even administrative powers within state 
limits. The commissioners are supposed to be insurance 



SURVEY AND OUTLOOK 313 

experts, or to employ experts, and they have annual con- 
ferences and constant correspondence in relation to uniform 
methods of inspection and control. Every insurance com- 
pany must now render reports to this insurance department, 
and it would be merely an extension of such departments 
if they were to be intrusted with collecting statistics about 
accidents, industrial diseases, fraternities, decisions of lia- 
bility suits, and all schemes of compulsory industrial 
insurance. This department could also act, if necessary, as 
the depository of reserve funds, as it already does in case 
of certain insurance corporations whose principal office is 
outside the state. 

The subject of industrial insurance has long been dis- 
cussed as a burning question among charity workers. 
Visitors among the poor, residents of social settlements, 
officers of relief societies could not fail to discover that 
thousands of families fall a burden upon charity, a burden 
too heavy for their funds, in consequence of the disability 
or death of workingmen on whom the families were de- 
pendent. Even if the charitable societies could raise enough 
money to meet the need the distribution of charity would be 
humiliating and degrading on a vast scale. It is also the 
intelligent charity visitor who discovers the frightful cost 
and the entire inadequacy of existing methods of trying 
to provide benefits through the agencies described above. 
Those who have organized the movement to combat tuber- 
culosis have come upon the discovery that industrial insur- 
ance is the only method thus far devised for providing a 
fund for the care of the afflicted and for establishing 
preventive means on a large foundation (thus Dr. A. C. 
Klebs, medical director of the Chicago Anti-Tuberculosis 
Society, article in American Journal of Sociology, Septem- 
ber, 1906). The National Conference of Charities and 
Correction, which counts among its members representa- 



314 INDUSTRIAL INSURANCE 

tives of all forms of philanthropic enterprises, in the year 
1901 appointed a committee to study and report on the 
methods of industrial insurance in this country and abroad, 
with a view to educating public sentiment on the subject. 
This committee made reports which may be found in the 
proceedings for 1905 and 1906, and the subject was so 
deeply interesting to the members that the same committee 
was kept in existence and requested to follow the subject 
in future reports. Various charity organizations have made 
local investigations into the extent and causes of poverty 
due to accidents and diseases of industries, and in publishing 
the results in the magazine, Charities and Commons, have 
urged the necessity of protection through some form of 
insurance. 

We may describe the actual situation in a typical city 
with large industrial population in order to set forth the 
facts in more concrete form. 1 

Michigan City is a rapidly growing manufacturing town 
of Indiana, situated on the Indiana port of Lake Michigan, 
and near to Chicago. The population is composed chiefly 
of workingmen and their families, German, Scandinavian, 
Slavic, and Italian. The Barker Car Works employ 2,500 
men; the Ford and Johnson Chair Factories employ 1,200 
men and boys. There are many women wage-earners in 
small factories. There are about 500 railroad employees. 
Mr. Bill found four classes of beneficiary associations: 
fraternal life insurance orders, fraternal benefit orders not 
furnishing life insurance, parish mutual benefit societies, 
and workingmen's mutual benefit societies. He also found 
casualty companies and burial benefit companies ("indus- 
trial insurance"), (i) Fraternal societies or orders furn- 
ishing life insurance are governed by state laws. In 

1 The facts are furnished from a yet unpublished paper of Mr. Ingram 
E. Bill, Jr. 



SURVEY AND OUTLOOK 315 

this town 20 orders are represented by 26 lodges. The 
membership of each lodge varies from 15 to 300; the 
majority having 75 to 150. Inquiry was made to discover 
the ratio of wage-earners in the membership. In one lodge 
of the Maccabees, with a membership of 300, 60 were busi- 
ness men, 12 farmers, 9 professional, 219 skilled workmen 
with good wages. In a lodge of the North American Union 
having 297 members, over 50 were laborers, earning not 
more than $2 a day. A lodge of the Modern Woodmen, 
with a membership of 210, had 193 wage-earners, 80 per 
cent, of whom receive $1.50 to $2 per day. In a lodge of 
the Royal Arcanum, generally regarded as a strong and 
safe order, 75 per cent, were workmen, and 20 per cent, 
of all did not earn more than $2 per day. In the lodges 
composed of women nearly all lived upon wages. (2) The 
fraternal orders which do not furnish life insurance, but 
only sickness, accident, and funeral benefits, are not so 
numerous or strong as the others just described. In the 
Odd Fellows lodges, about 75 per cent, are wage-earners. 
In sickness they pay $4 a week benefits and $1.50 a day for 
nurse hire; the funeral benfit is $100. The Order of Eagles 
is composed chiefly of artisans and professional men; few 
are low-paid laborers. The dues are 50 cents a month ; the 
sick benefits $5 a week, for 13 weeks; and the funeral benefit 
is $100. The Order of Mutual Protection, the North 
American Union, and the Foresters provide a permanent 
disability benefit which is 10 per cent, annually of the 
amount of the death benefit. (3) In one factory with 600 
to 700 employees there is a mutual benefit society with about 
350 members. The members must be over 14 years of age 
and under 45, in good health and of moral character. The 
dues are 90 cents a quarter; in case of disability due to 
accident or sickness a weekly benefit of $5 is paid for 16 
weeks. The employers are said to contribute to this society, 



316 INDUSTRIAL INSURANCE 

but no definite amount is mentioned. Wages are usually 
under $2 a day. (4) In the Catholic and Lutheran parishes 
aid societies exist. The St. John's German Lutheran 
society was founded in 1855; has 260 members, mostly 
workingmen. The dues are $6 a year; the benefits during 
disability from accident or sickness are $8 a week; death 
benefit, $800. 

The immigrants more recently arrived, as the Italians, 
Syrians, and Turks, have not yet established mutual benefit 
societies. Among these the industrial companies send 
energetic agents who collect large sums in the aggregate for 
high premiums ; but the burial benefits are meager. 

GENERAL CONCLUSIONS IN RELATION TO EACH METHOD OF 

INSURANCE 

Sickness insurance. The present organs of sickness 
insurance are: local mutual benefit societies, lodges of the 
trade-unions and fraternal societies, relief departments of 
railroads, and casualty companies. Naturally this form of 
insurance is most widely developed among the workmen of 
cities. Everywhere the organization is voluntary, unless we 
may speak of constraint to enter the relief departments and 
other similar arrangements as a condition of employment 
as compulsion. The local societies are seldom united in 
groups, and each bears its burden alone. Central direction 
and supervision by the state are unknown. The lodges of 
the fraternal societies and of some of the trade-unions work 
under control from a central legislature. The administra- 
tion of the relief departments is in the hands of committees 
representing both employers and employees. Those who 
simulate sickness are discovered by medical examination, 
or by visits of committees. None of these agencies rests on a 
strictly scientific basis approved by actuaries. Even the rates 
of the insurance companies rest chiefly on empirical founda- 



SURVEY AND OUTLOOK 317 

tions, may be changed at any time, and are determined 
largely by competition. Frequently the companies regard 
each other with such suspicion that a common registration 
is said to be impossible; a fact much to be regretted, since 
a comparison of experience would aid in giving the move- 
ment the light of the widest and most varied experience. 
For the settlement of disputes between members and the 
directors, or between holders and companies, the courts are 
open; but this is a way too costly and tedious to be taken 
into consideration. It would be one of the advantages of 
compulsory insurance that the state could provide a simple 
and inexpensive arrangement for hearing and deciding cases 
impartially. 

Accident insurance. The employers' liability law 
remains in its ancient limits; it is behind the British com- 
pensation act of 1897 and much farther behind the German 
insurance law of 1884. The principle that social care in any 
explicit way is a duty of the community has never been 
openly recognized. The injured man stands at once over 
against his employer as an enemy seeking damages even of 
a punitive character. Before he can recover damages he 
must prove, with the presumption against him, that the 
injury can be traced to the negligence of the employer and 
is actually due to such negligence. Compulsory insurance 
or even compensation is not a part of the legal provisions. 
Voluntary organizations, fragmentary and unfair in char- 
acter, are further developed with the railroads than else- 
where. In agriculture there is hardly a discoverable attempt 
in this direction. 2 

2 And yet agriculture bids fair to be reckoned among dangerous trades ; 
the introduction of steam-driven machinery increases accidents. Bailey, 
Modern Social Conditions, pp. 247, 291, citing Twelfth Census of U. S., 
1902, Vol. Ill, p. 262 ff. ; Zacher, Arbeiterversicherung im Auslande, 
Heft XVI, p. 18; Handworterbuch der Staatswissenschaften, Bd. VII, p. 
260, "Unfallstatistik." 



318 INDUSTRIAL INSURANCE 

The railroads have generally sought to insure their em- 
ployees either through agreements with casualty companies 
or by relief departments ; but the employees must carry the 
greater part of the burden. The employers in other dan- 
gerous trades have often organized accident insurance, but 
generally the schemes load the employees with premiums, 
cover only a part of the real loss, and lack full actuarial 
basis. There is nowhere state supervision, or direction, no 
obligation to insure, no unity or uniformity of method; 
mostly anarchy. The administration varies with the form 
of organization : in the mutual benefit associations the matter 
is directed by a committee with officers and clerks; in the 
trade-unions the lodge governs the direction ; and in casualty 
companies all is administered by the central office. 

In relation to 'the two methods of paying benefits and 
indemnities it may safely be said that American practice is 
at variance with the judgment of many men of experience. 
The temptation to squander a lump sum when indemnity 
is so paid is very great. Not much is left of a little 
fortune after a few months. Payment by instalments would 
seem to be far better except in rare instances. But the 
general custom of casualty companies, of employers' asso- 
ciations, and of courts is to settle a case of death or total 
disability as soon as possible by payment of a sum agreed 
upon by compromise. The relief departments, however, 
for temporary disability, pay a certain sum by the week or 
month during the period of need, and this is true of casualty 
companies. 

Payment of income of funds. In the relief departments 
of railroads and in the casualty companies the fund is pro- 
vided by payment of premiums at intervals in advance. No 
example has been found of groups of employers federated to 
provide accident insurance ; and, indeed, the motive is lacking 
for such organization. It is significant that employers have 



SURVEY AND OUTLOOK 319 

organized such associations for fire insurance, in competi- 
tion with the companies, and these seem to have worked 
well. The assessment plan of payment is customary in some 
life insurance companies, in fraternal societies, and in 
trade-unions, certain sums being levied at a death or at 
intervals during the year. In settlement of disputes we have 
only contracts, conferences, and, in the last resort, the law 
suit. 

Old age and invalidism. A few of the trade-unions 
have begun to establish funds for old-age retirement bene- 
fits. The fraternal societies exhibit a serious defect at this 
point, tinder their system they can carry life insurance 
only to the region of old age and then the "brother" must 
care for himself, a very inconsistent kind of fraternity, yet 
inseparable from present methods. The Mutualists of 
France have gone much farther in meeting this difficulty 
by establishing funds for old age and invalidism. Some of 
the railroad corporations and even private firms have 
founded funds for old-age pensions and this movement 
seems to be growing in the country. Cities have pension 
funds for policemen, firemen, and to some extent for teach- 
ers. The nation and the states have made the old age of 
veterans comfortable. It is perfectly clear that the common 
laborers of cities can never on present wages provide for 
old age without help of employers and the public; the out- 
look is simply hopeless. The income of the workingmen of 
cities is too small and too irregular to warrant any unaided 
attempt to provide for the last period of life. In the United 
States there is no example even of state subsidies to en- 
courage voluntary associations, as in France and in Belgium. 
Powerful and wealthy corporations, as railroads, canals, 
ship builders, have not been above asking the government 
for subsidies to aid "infant industries," even when those 
industries have become aged and corpulent, but they would 



320 INDUSTRIAL INSURANCE 

brand any attempt to subsidize old-age funds for working- 
men as rank "socialism." 

Mr. Frederick L. Hoffman 3 argues against state pen- 
sions on grounds usually urged by opponents of advanced 
social legislation. He makes an estimate of the cost of a 
state old-age pension system : 

Upon the basis of a careful estimate for January i, 1908, the popu- 
lation of the United States aged 60 and over is 5,512,704, aged 65 and 

over 3,531,576, and aged 70 and over 1,981,128 Adopting the 

estimate of a British Departmental Committee, that at ages 65 and 
over 32.4 per cent, would be entitled to pensions, the numbers pension- 
able in the United States at that age would be 1,144,230 

Assuming as a minimum a pension of $5.00 a week, as the lowest 
amount at which support could be obtained, in conformity to the 
American standard of living, the annual cost to provide a pension of 
this amount for the probable number of aged poor at ages 65 and 

over throughout the country would be $297,499,800 If the age 

were reduced to 60, the corresponding amount would be $464,390,160 

per annum for the United States If the pension age were placed 

at age 70, the amount would be $166,890,100 per annum for the 
United States. 

Mr. Hoffman would provide guarantees in old age by 
security for their investments, by voluntary savings and 
insurance, by reliance on filial piety, and by such modifica- 
tions of employers' liability laws as would make each trade 
carry the cost of the injury it inflicts by accident or disease. 
As to the possibility of providing for old age by an- 
nuities paid for out of wages, he says : 

Insurance could do much, if not most, to provide the necessary 
means of self-support in old age. The rational expenditures of the 
weekly income of American wage-earners should leave a sufficient 
margin to pay the premiums for an annuity beginning with age 60 or 
65, according to circumstances and conditions, sufficient to meet 
reasonable needs in old age. If but 5 per cent, of the average income 

3 Proceedings of National Conference of Charities and Correction, 
1908. 



SURVEY AND OUTLOOK 321 

is paid out for insurance premiums, a sufficient sum can be secured 
which will provide as much, if not more, than the state can ever pay 
even under the most liberal system of old-age pensions. Let us take, 
for illustration, an income of $900 per annum, 5 per cent, of which 
is $45; commencing with the age 30 and continuing to age 65, this 
sum paid to a responsible insurance company will purchase an annuity 
of $454.09 per annum for a man, and of $375.03 per annum for a 
woman. Or, to put the matter in another way, let a man begin at the 
age of 30 to pay annually $42.65 and he will be entitled to receive an 
annuity of $250 per annum for the remainder of his life, beginning 
at age 60; or, if he prefers, it will cost him only $24.78 per annum 
to secure such an annuity, beginning with age 65. In the case of 
women the cost is somewhat greater on account cf the superior expec- 
tation of life of women in old age. Let us suppose that the man is 
not able to commence at age 30, but that he begins to make his 
periodical payments at age 40, and continues for 25 years, then the 
cost of an annuity of $250 per annum will be $45.50 a year, or 6.50 
per cent, of an income of $700, or 5.05 per cent, of an income of $900, 
or 3-79 per cent, of an income of $1,200 per annum. These calcula- 
tions are upon the usual plan of selling deferred annuities, and, of 
course, if death should occur during the intervening period the pay- 
ments made would be forfeited, or accrue to the benefit of surviving 
co-contributors to the fund. Of course, the earlier in life the periodi- 
cal payments begin, the smaller the amount required to be paid. Many 
other plans have been devised by which joint annuities can be pur- 
chased. A continuous instalment policy, for illustration, provides for 
the surviving wife in the event of the husband's death for the 
remainder of her life, or for the needs of children for a period of 
twenty years. 

It is a question of historical fact whether there is any 
reasonable ground for expectation that the wage-earners 
either can or will take advantage of these methods. Some 
light on this matter is given in the first chapter of this series 
in which such data as exist have been studied. In other 
places Mr. Hoffman himself does not take an optimistic 
attitude. Thus in his paper before the New York State 
Conference of Charities and Correction, in 1901, he says: 

It is absolutely impossible at the present rate of wages, and at the 



322 INDUSTRIAL INSURANCE 

present cost of living, for a workingman to save a sum sufficient to do 

away with all the social and economic misery of modern life 

The wages received by the average man are insufficient and will remain 
insufficient for many years to come to meet all the requirements which 
a healthy and happy social life imposes upon him. 4 

Since sickness is always a remote contingency, the sur- 
plus earnings will be devoted to other purposes for the time 
being, rather than put aside for a possible occurrence which, 
however, may never take place. (See also a paper by the 
writer, on "Sickness and Invalid Insurance in Relation to 
Tuberculosis," International Tuberculosis Congress, 1908, 
Washington. ) 

Various are the methods of providing funeral funds and 
life insurance. The poorest workmen of America count 
among their most necessary expenses the premiums which 
will provide money for a respectable funeral. Sickness and 
accident insurance come later, and the contingency of need 
in old age is to their imagination far more remote. The 
colossal sums poured annually from slender incomes into 
the coffers of the "industrial insurance" companies are 
witness of the spirit of sacrifice which is inspired by the 
sentiment of repugnance to burial at public expense. The 
benefit departments of the fraternal societies and fraternal 
insurance societies prove the interest of skilled artisans in 
providing for future want by insurance. 

Comparatively little has been done for unemployment 
insurance. Apart from occasional gifts of cities, or hastily 
planned emergency works, the public has manifested no 
interest in this burning question. During the past years 
of unexampled and long-continued prosperity the occasion 
for such insurance has not been so clear as it would be in a 
period of depression. Of the trade-union methods of deal- 
ing with those out of work we have already spoken. 

* Proceedings, pp. 273, 274. 



APPENDIX A 
BIBLIOGRAPHY 

Accident Insurance Manual. The Spectator Company, New York. 

ADAMS, T. S., AND SUMNER, H. L. : Labor Problems, pp. 160-71. 

Arbeitslosigkeit: "Die bestehenden Einrichtungen zur Versicherung 
gegen die Folgen der Arbeitslosigkeit im Auslande und im Deut- 
schen Reich." Bearbeitet im Kaiserlichen Statistischen Amt, 
Abteilung fur Arbeiterstatistik, Berlin, 1906. 3. Bande; Teil I. 
S. 350-60. 

BECK, J. D., AND LORENZ, M. O. : Thirteenth Biennial Report of the 
Bureau of Labor and Industrial Statistics of Wisconsin, 1908. 

BEMIS, E. W. : "Arbeiterversicherung in den Vereinigten Staaten," 
in Handworterbuch der Staatswissenschaften, Jena 1898, Bd. 1, 

s. 714-32. 

: Benefit Features of American Trade Unions, U. S. Depart- 
ment of Labor, Bulletin No. 22, May, 1899, S. 361-400. 

BOLEN, GEORGE L. : Getting a Living, 1903, S. 581-99. 

BROOKS, JOHN GRAHAM: "The Future Problem of Charity and the 
Unemployed," Annals of the American Academy of Political and 
Social Science, Vol. V, July, 1894, June, 1895. 

: Compulsory Insurance in Germany, U. S. Bureau of Labor, 

IV, Special Report, 1893. 

: Social Unrest. 



BROWN, MARY W.: The Development of Thrift, 1899. 

DAWSON, MILES M. : "Insurance," in Bliss's Encyclopedia of Social 

Reforms, p. 735. 
: "Pension Funds," Railway Age, Vol. XXXVIII, pp. 262, 292, 

332, 379, 4M, 497, 589, 684. 
FARNAM, HENRY W. : Yale Review, Vol. XIII, 1905, pp. 98-113, 

435-38. 
FESSENDEN, STEPHEN D. : "Relief Associations," Monographs on Social 

Economics, No. 4, p. 50; ed. Charles H. Verill, Washington, 1901. 
: Employers' Liability. U. S. Bureau of Labor, Bulletin No. 

31, November, 1900. 
FORMAN, S. E. : Cost of Industrial Insurance in the District of 

323 



324 INDUSTRIAL INSURANCE 

Columbia; Bulletin of U. S. Bureau of Labor, No. 67, November, 

1906, pp. 781-822. 
FRICKE, W. A. : Insurance, 1898. 

GALLARD, T. : L' Hygiene de fouvrier aux Etats-unis (1905). 
OILMAN, N. P. : Methods of Industrial Peace, 1904. 
OILMAN, N. P. : A Dividend to Labor, 1899. 
HALE, E. E. : We, the People, 1903, pp. 278-91. 

HAMILTON, JAMES HENRY: Savings and Savings Institutions, 1902. 
HARD, W. : Article in Everybody's Magazine, October, 1908. 
HENDERSON, CHARLES RICHMOND: "Industrial Insurance," articles in 

American Journal of Sociology, January, 1907, ff. 

: Modern Methods of Charity, 1904. 

: "Workingmen's Insurance in the United States," Arbeiter- 

versicherungs-Congress, Wien 1905 (Band I, S. 57 ff.), and Rome, 

1908. 
: "Workingmen's Insurance," World To-Day, Vol. X, February, 

1906, p. 145- 
: Die Arbeiter-Versicherung in den Vereinigten Staaten von 



Nord-Amerika; Heft XVII. Zacher, "Die Arbeiter-Versicherung 

in Auslande;" Berlin, 1907. 

HOFFMAN, F. L. : Art. "Insurance," in Encyclopedia Americana. 
Industrial Commission, Report of: Vol. IV, pp. 156-158; Vol V, p. 64; 

Vol. IX, pp. xlviii, cclix; Vol. XIV, p. cxviii; Vol. XVII, pp. 660, 

857, 858, 866-71, 822-47; Vol. VII, p. 77, 78. 
Industrial Insurance in U. S. : Rapports du Jury International, Groupe 

XVI, Economic sociale, 3. partie, classes 109 a HI, Paris, 1904. 
Insurance, papers. American Academy Political and Social Science, 

1905. 
JOHNSON, EMORY R. : Brotherhood Relief and Insurance of Railway 

Employees, U. S. Department of Labor, Bulletin, July 1898, pp. 

552-95- 

KERR, W. D. : "Workmen's Compensation for Industrial Accidents," 
Wisconsin Bureau of Labor Statistics, Report, 1904, pp. 409-539- 

LEVASSEUR, E. : L'ouvrier americain, Vol. I, pp. 145, 237; 1898. 

LINDSAY, SAMUEL McCuNE: Railway Employees in U. S., U. S. 
Bulletin of Labor, No. 37, 1901, pp. 1023-98. 

Manual of Policies and Rates, Fraternal Orders and Assessment Socie- 
ties. The Spectator Company. 

Massachusetts, Labor Bulletin No. 41, May 1906, p. 142. 

MEYER, B. H. : "Fraternal Insurance," Annals of American Academy 



I 

APPENDICES 325 

of Political and Social Science, Vol. XVII, pp. 260-86; American 

Journal of Sociology, Vol. VI, p. 646. "Problems," pp. 574-88, 1905 

(Yale Review, Vol. XII, 1904, p. 716). 
Minnesota, Bureau of Labor Statistics, Third Biennial Report, 1891-92, 

Trade Union Insurance. 
MONROE, PAUL: "Insurance against Non-employment," American 

Journal of Sociology, Vol. II, pp. 771-85, May, 1897. 
MONROE, PAUL : "An American System of Labor Pensions and Insur- 
ance," American Journal of Sociology, Vol. II, January, 1897, pp. 

501-14- 
National Conference of Charities and Correction, Proceedings, 1905 

and 1906; Reports of Committee on Workingmen's Insurance. 
National Education Association: Report on Salaries, Tenure, and 

Pensions, 1905 (cf. Report of U. S. Commissioner of Education, 

1902, p. 712; 1903, p. 2440). 
New York, Department of Labor, 1906. Third Annual Report, 1904, 

p. no. 
New York State Conference of Chanties and Correction, Proceedings, 

1902, pp. 253, 274. 
New York Bureau of Labor Statistics, Seventeenth Annual Report, 

1899, p. 557 (industrial accidents). 

PINKUS, NORBERT: "Trade Unionism and Labor," Commons. 
RIEBENACK, M. : Railway Provident Institutions in English-speaking 

Countries, 1905. 
RUBINOW, I. M. : "Compulsory State Insurance of Workingmen," 

Annals of American Academy of Political and Social Science, Vol. 

XXIV, September, 1904, pp. 331-42 (cf. Journal of Political 

Economy, Vol. XII, January, 1904, pp. 362-81). 
SCOTT, EDSON S. : "Accident Insurance," Annals of American Academy, 

Vol. XXVI, 1905, p. 483. 

STIMSON, F. J. : Handbook to the Labor Law of the U. S., 1895. 
United States Civil Service Commission, Eighteenth Annual Report, 

1901, p. 150; Twentieth Report, 1902, pp. 183-87. 
United States, Department of Labor, 1904, 10. Special Report, Labor 

Laws of the U. S. 
VANDERLIP, F. A. : "Insurance for Workingmen," North American 

Review, Vol. CLXXXI, December, 1905, pp. 921-32. 
v. WALTERSHAUSEN, A. SARTORIUS, FREIHERR: "Das Hilfskassenwesen 

in Nord-Amerika," Jahrb. f. Nat.-Oekon, u. Stat., Bd. XLV (N. F. 

10), 1885. 



326 INDUSTRIAL INSURANCE 

WAUDBY, W. S. : Mutual Relief and Benefit Associations in the Print- 
ing Trade, U. S. Department of Labor, Bulletin No. 19, 1898, pp. 
829-51. 

WEBER, ADNA F. : "Accident Insurance," Political Science Quarterly, 
Vol. XVII, 1902, pp. 256^83- 

WEBER, GUSTAVUS A. : "Workingmen's Insurance in the United States," 
Internationaler Arbeiter-Versicherungs-Congress, 1902, Dusseldorf, 
pp. 617-42. 

WILLOUGHBY, W. F. : Workingmen's Insurance, 1898. 

: "Unemployment and Trades Unions," Commons (J. R. ed.) ; 

Trade Unionism (cf. Political Science Quarterly, Vol. XII, 1897, 
P- 476). 

WRIGHT, C. D. : Practical Sociology, 1899, p. 270. 

ZACHER, G. : "Die Arbeiterversicherung auf der Weltausstellung in 
St. Louis, 1904;" Sonderabdruck aus deni Amtlichen Berichte des 
Deutschen Reichskommissars, Berlin, 1906 (S. 515 fr.). v 

: "Leitfaden zur Arbeiterversicherung des Deutschen Reichs," 

mit internationaler iibersicht im Anhang, S. 40 ff. 10. Ausg. 
(deutsch. engl., franzosisch), Berlin, 1904; n. Ausg., Berlin, 1906; 
13. Ausgabe, Berlin, 1908. 



APPENDIX B 1 

COMMON CARRIERS' LIABILITY LAW 
[H. R. 20310.] 

An Act Relating to the liability of common carriers by railroad to their 
employees in certain cases. 

Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled: That every common 
carrier by railroad while engaging in commerce between any of the 
several States or Territories, or between any of the States and Terri- 
tories, or between the District of Columbia and any of the States or 
Territories, or between the District of Columbia or any of the States 
or Territories and any foreign nation or nations, shall be liable in 
damages to any person suffering injury while he is employed by such 
carrier in such commerce, or, in case of the death of such employee, 
to his or her personal representative, for the benefit of the surviving 
widow or husband and children of such employee; and, if none, then 
of such employee's parents; and, if none, then of the next of kin 
dependent upon such employee, for such injury or death resulting in 
whole or in part from the negligence of any of the officers, agents, or 
employees of such carrier, or by reason of any defect or insufficiency, 
due to its negligence, in its cars, engines, appliances, machinery, track, 
roadbed, works, boats, wharves, or other equipment. 

SEC. 2. That every common carrier by railroad in the Territories, 
the District of Columbia, the Panama Canal Zone, or other possessions 
cf the United States shall be liable in damages to any person suffering 
injury while he is employed by such carrier in any of said jurisdictions, 
or, in case of the death of such employee, to his or her personal repre- 
sentative, for the benefit of the surviving widow or husband and chil- 
dren of such employee; and, if none, then of such employee's parents; 
and, if none, then of the next of kin dependent upon such employee, for 

1 The common carriers' liability law of 1903 was declared unconstitu- 
tional by the Supreme Court on January 6, 1908. On April 22, 1908, 
President Roosevelt approved an amended form of the law. 

The printing of these laws, bills and plans of employers in this 
volume does not carry with it the approval of the author. Criticisms are 
found in the text. C. R. HENDERSON. 

3 2 7 



328 INDUSTRIAL INSURANCE 

such injury or death resulting in whole or in part from the negligence 
of any of the officers, agents, or employees of such carrier, or by 
reason of any defect or insufficiency, due to its negligence, in its cars, 
engines, appliances, machinery, track, roadbed, works, boats, wharves, 
or other equipment. 

SEC. 3. That in all actions hereafter brought against any such com- 
mon carrier by railroad under or by virtue of any of the provisions of 
this Act to recover damages for personal injuries to an employee, or 
where such injuries have resulted in his death, the fact that the 
employee may have been guilty of contributory negligence shall not 
bar a recovery, but the damages shall be diminished by the jury in pro- 
portion to the amount of negligence attributable to such employee: 
Provided, That no such employee who may be injured or killed shall 
be held to have been guilty of contributory negligence in any case 
where the violation by such common carrier of any statute enacted for 
the safety of employees contributed to the injury or death of such 
employee. 

SEC. 4. That in any action brought against any common carrier 
under or by virtue of any of the provisions of this Act to recover 
damages for injuries to, or the death of, any of its employees, such 
employee shall not be held to have assumed the risks of his employ- 
ment in any case where the violation by such common carrier of any 
statute enacted for the safety of employees contributed to the injury 
or death of such employee. 

SEC. 5. That any contract, rule, regulation, or device whatsoever, 
the purpose or intent of which shall be to enable any common carrier 
to exempt itself from any liability created by this Act, shall to that 
extent be void: Provided, That in any action brought against any 
such common carrier under or by virtue of any of the provisions of 
this Act, such common carrier may set off therein any sum it has con- 
tributed or paid to any insurance, relief benefit, or indemnity that may 
have been paid to the injured employee, or the person entitled thereto, 
on account of the injury or death for which said action was brought. > 

SEC. 6. That no action shall be maintained under this Act unless 
commenced within two years from the day the cause of action accrued. 

SEC. 7. That the term "common carrier" as used in this Act shall 
include the receiver or receivers or other persons or corporations 
charged with the duty of the management and operation of the busi- 
ness of a common carrier. 

SEC. 8. That nothing in this Act shall be held to limit the duty or 



APPENDICES 329 

liability of common carriers or to impair the rights of their employees 
under any other Act or Acts of Congress, or to affect the prosecution 
of any pending proceeding or right of action under the Act of Con- 
gress entitled "An Act relating to liability of common carriers in the 
District of Columbia and Territories, and to common carriers engaged 
in commerce between the States and between the States and foreign 
nations to their employees," approved June eleventh, nineteen hundred 
and six. 

Approved, April 22, 1908. 



APPENDIX C 

FEDERAL COMPENSATION LAW 

[H. R. 21844.] 

An Act Granting to certain employees of the United States the right to 
receive from it compensation for injuries sustained in the course of 
their employment. 

Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled: That when, on or 
after August first, nineteen hundred and eight, any person employed by 
the United States as an artisan or laborer in any of its manufacturing 
establishments, arsenals, or navy-yards, or in the construction of river 
and harbor or fortification work or in hazardous employment on con- 
struction work in the reclamation of arid lands or the management 
and control of the same, or in hazardous employment under the Isth- 
mian Canal Commission, is injured in the course of such employment, 
such employee shall be entitled to receive for one year thereafter, 
unless such employee, in the opinion of the Secretary of Commerce 
and Labor, be sooner able to resume work, the same pay as if he con- 
tinued to be employed, such payment to be made under such regula- 
tions as the Secretary of Commerce and Labor may prescribe: Pro- 
vided, That no compensation shall be paid under this Act where the 
injury is due to the negligence or misconduct of the employee injured, 
nor unless said injury shall continue for more than fifteen days. All 
questions of negligence or misconduct shall be determined by the 
Secretary of Commerce and Labor. 

SEC. 2. That if any artisan or laborer so employed shall die during 
the said year by reason of such injury received in the course of such 
employment, leaving a widow, or a child or children under sixteen 
years of age, or a dependent parent, such widow and child or children 
and dependent parent shall be entitled to receive, in such portions and 
under such regulations as the Secretary of Commerce and Labor may 
prescribe, the same amount, for the remainder of the said year, that 
said artisan or laborer would be entitled to receive as pay if such 
employee were alive and continued to be employed : Provided, That if 
the widow shall die at any time during the said year her portion of 

33 



APPENDICES 331 

said amount shall be added to the amount to be paid to the remaining 
beneficiaries under the provisions of this section, if there be any. 

SEC. 3. That whenever an accident occurs to any employee embraced 
within the terms of the first section of this Act, and which results in 
death or a probable incapacity for work, it shall be the duty of the 
official superior of such employee to at once report such accident and 
the injury resulting therefrom to the head of his Bureau or inde- 
pendent office, and his report shall be immediately communicated, 
through regular official channels, to the Secretary of Commerce and 
Labor. Such report shall state, first, the time, cause, and nature of the 
accident and injury and the probable duration of the injury resulting 
therefrom ; second, whether the accident arose out of or in the course 
of the injured person's employment; third, whether the accident was 
due to negligence or misconduct on the part of the employee injured; 
fourth, any other matters required by such rules and regulations as 
the Secretary of Commerce and Labor may prescribe. The head of 
each Department or independent office shall have power, however, to 
charge a special official with the duty of making such reports. 

SEC. 4. That in the case of any accident which shall result in 
death, the persons entitled to compensation under this Act or their 
legal representatives shall, within ninety days after such death, file 
with the Secretary of Commerce and Labor an affidavit setting forth 
their relationship to the deceased and the ground of their claim for 
compensation under the provisions of this Act. This shall be accom- 
panied by the certificate of the attending physician setting forth the 
fact and cause of death, or the non-production of the certificate shall 
be satisfactorily accounted for. In the case of incapacity for work 
lasting more than fifteen days, the injured party desiring to take the 
benefit of this Act shall, within a reasonable period after the expira- 
tion of such time, file with his . official superior, to be forwarded 
through regular official channels to the Secretary of Commerce and 
Labor, an affidavit setting forth the grounds of his claim for compen- 
sation, to be accompanied by a certificate of the attending physician as 
to the cause and nature of the injury and probable duration of the 
incapacity, or the non-production of the certificate shall be satisfactorily 
accounted for. If the Secretary of Commerce and Labor shall find 
from the report and affidavit or other evidence produced by the claim- 
ant or his or her legal representatives, or from such additional investi- 
gation as the Secretary of Commerce and Labor may direct, that a 
claim for compensation is established under this Act, the compensation 



332 INDUSTRIAL INSURANCE 

to be paid shall be determined as provided under this Act and 
approved for payment by the Secretary of Commerce and Labor. 

SEC. 5. That the employee shall, whenever and as often as required 
by the Secretary of Commerce and Labor, at least once in six months, 
submit to medical examination, to be provided and paid for under the 
direction of the Secretary, and if such employee refuses to submit to 
or obstructs such examination his or her right to compensation shall 
be lost for the period covered by the continuance of such refusal or 
obstruction. 

SEC. 6. That payments under this Act are only to be made to the 
beneficiaries or their legal representatives other than assignees, and 
shall not be subject to the claims of creditors. 

SEC. 7. That the United States shall not exempt itself from liability 
under this Act by any contract, agreement, rule, or regulation, and 
any such contract, agreement, rule, or regulation shall be pro tanto 
void. 

SEC. 8. That all Acts or parts of Acts in conflict herewith or pro- 
viding a different scale of compensation or otherwise regulating its 
payment are hereby repealed. 

Approved, May 30, 1908. 



APPENDIX D 

BILL CONSIDERED BY LEGISLATURE OF ILLINOIS 1 
An act to facilitate the insurance of employees against the conse- 
quences of accidents resulting in personal injury or death, and to permit 
agreements between employers and employees with reference to such 
accidents. 

SECTION i. Be it enacted by the People of the State of Illinois, 
represented in the General Assembly: That it shall be lawful for 
any employer to make a contract in writing with any employee whereby 
the parties may agree that the employee shall become insured against 
accident occurring in the course of employment which results in per- 
sonal injury or death, in accordance with the provisions of this act, 
and that in consideration of such insurance the employer shall be 
relieved from the consequences of acts or omissions by reason of 
which he would without such contract become liable toward such 
employee or toward the legal representative, widow, widower, or next 
of kin of such employee. 

SEC. 2. Such insurance shall be effected in some casualty insurance 
company, organized under the laws of the State of Illinois or admitted 
to do business in this state, provided that any employer employing 
not less than fifteen hundred (1,500) employees may establish an 
insurance fund from sums contributed by himself and his employees, 
upon condition that he undertake and agree to make up any deficiency 
in insurance benefits that may arise out of the inadequacy of such 
fund. Such fund shall be inviolably appropriated as a trust fund for 
the purposes of such insurance, and shall not be invested otherwise 
than in acordance with the provisions of sec. 14 of an act to provide 

1 This bill was recommended to the legislature of Illinois by the 
Industrial Insurance Commission appointed by Governor C. S. Deneen in 
accordance with a joint resolution of the legislature of Illinois, May, 1905. 
The bill was introduced into the Senate in April, 1907, and was discussed 
in a committee. It has received much notice and commendation from 
actuaries and the Department of Commerce and Labor, and was intro- 
duced into the legislature of New York in 1898. An account of its intro- 
duction is given in the Proceedings of the American Economic Association, 
1908. Its central principle is embodied in the Massachusetts law of 1908, 

333 



334 INDUSTRIAL INSURANCE 

for the organization of mutual insurance corporations, approved May 
16, 1905. Provision shall be made for the election by the insured 
employees of an advisory committee which shall be kept informed 
regarding the state of the insurance fund, and shall have the right to 
examine the books kept in connection therewith. Such books shall 
also be subject to the inspection of the insurance superintendent of 
the state in the same manner as the books of insurance companies 
doing business in this state. 

Upon the request of the employer, or upon the request of the 
advisory committee, the insurance superintendent shall act as deposi- 
tary of the securities in which any such fund may be invested. 

If any employer desires to discontinue an insurance fund main- 
tained by him, or if he discontinues his business without transferring 
the same to a successor or assign, taking over and agreeing to main- 
tain such fund, he shall notify the insurance superintendent of his 
purpose, who shall thereupon supervise the disposition of the insur- 
ance fund. Such fund shall be distributed among those equitably 
entitled to it according to their contributions (not taking into con- 
sideration expenses of the management), and where those entitled to 
any part of the fund cannot be discovered or ascertained, the moneys 
remaining unclaimed shall be paid into the insurance department to be 
held and disposed of as may be provided by law. The insurance 
superintendent shall be entitled to be paid out of such fund the reason- 
able expenses of his supervision, including a compensation not to exceed 
ten dollars per day for the time of any person or persons (other than 
a salaried employee of his office) employed by him for the purpose 
of such supervision necessarily spent in connection therewith. 

SEC. 3. Such insurance shall cover the risk of personal injury by 
accident arising out of and in course of the employment, resulting in 
death, provided death occur within twelve months from the time of 
such injury, or resulting in disability, whether the same be total or 
partial, permanent or temporary. 

SEC. 4. The insurance in case of death shall be for the benefit of 
such persons, being the widow, widower, father, mother, grandfather, 
grandmother, stepfather, stepmother, son, daughter, grandson, grand- 
daughter, stepson, stepdaughter, brother, sister, half-brother, or half- 
sister, as are dependent wholly or in part for their support upon the 
earnings of such employee (all of which persons are hereinafter desig- 
nated as dependents of such employee), or of such of them as may be 
named in the contract or the policy to which it refers and the persons 



APPENDICES 335 

for whose benefit such insurance is made shall be bound by the agree- 
ment authorized by the first section of this act. 

SEC. 5. In order to satisfy the requirements of this act the benefits 
payable under such insurance shall be at least as follows : 

(i) In case of death. 

(a) If the employee insures for the benefit of any dependents 
wholly dependent upon his wages at the time of his death, a sum equal 
to his wages in the employment of said employer during a period of 
three years next preceding the accident, but not less, in any case, 
than the sum of one thousand dollars, provided that the amount of 
any weekly payments made .under such insurance or any lump sum 
paid in redemption thereof may be deducted from such sum, and if 
the period of the employee's employment by said employer has been 
less than said three years, then the amount of his earnings during the 
said three years shall be deemed to be one hundred and fifty-six times 
his average weekly earnings during the period of his actual employ- 
ment by said employer. 

(6) If the employee insures for the benefit only of persons partly 
dependent upon his wages at the time of his death, then a sum equal 
to the payments provided for the benefit of persons wholly dependent, 
less six times the average annual earnings, or if employed for less 
than a year, then less three hundred times the average weekly earn- 
ings of the said dependent person or persons partly dependent on his 
wages. 

(c) If the employee leaves no dependents, then the reasonable 
expenses of his medical attendance shall be paid; and in addition, 
burial expenses not less than $75 nor more than $100 shall be paid. 

And the contract or the policy therein referred to may provide for 
the payment, instead of a lump sum, of a weekly sum which in the 
case of persons wholly dependent, shall not be less than the weekly 
payment in case of total disability hereinafter provided for, and 
which, in the case of persons partly dependent, shall not be less than 
the weekly payment in case of total disability, less the amounts earned 
by the persons partly dependent, and which sum may be divided between 
the dependents in such manner as such contract or policy may provide 
or as may otherwise be agreed upon; or such contract or policy may 
provide for a combination of lump sums and weekly payments, or for 
the substitution of one for the other. 

(ii) In case of injury not resulting in death, where total disability 
results from the injury, a weekly payment during the period of such 



336 INDUSTRIAL INSURANCE 

disability shall be paid to the insured, which shall not be less than 
50 per cent, of his average weekly wages during the previous twelve 
months, if he has been so long employed by the contracting employer; 
if not, then a weekly benefit during the period of such disability which 
shall not be less than 50 per cent, of his average weekly wages during 
such shorter period as he has been in the employment of said 
employer. 

(iii) In case of injury not resulting in death, where partial disa- 
bility results, such weekly payment shall be made during the period of 
such partial disability as is equal to the difference between the weekly 
benefit payment during the period of total disability and the average 
amount which the injured person is able to earn after the accident. 
Loss by actual separation at or above the wrists or ankles of both 
hands or both feet, or of one hand and one foot, or the irrevocable 
loss of both eyes shall be deemed to be equal to total disability; the 
loss by actual separation at or above the wrist or ankle of one hand 
or one foot shall be equal to one-half of total disability; and the loss 
of one eye shall be equal to one-fifth of total disability. Total disa- 
bility shall be deemed to mean inability to carry on any gainful 
occupation. 

The contract or the policy herein referred to may provide that no 
benefits shall be paid in case of any injury which does not incapacitate 
the employee for a period of at least one week from earning full wages 
at the work at which he was employed at the time of the accident. 

SEC. 6. Any contract, in order to satisfy the requirements of this 
act, shall provide that the employer shall contribute not less than 50 
per cent, of the insurance premiums and the employees shall con- 
tribute the remainder of the premiums. In case the employer pro- 
vides any insurance fund out of contributions made by himself and 
his own employees, as above provided, such employer shall pay the 
whole of the expenses of the management of such fund and all con- 
tributions shall be paid into such fund without any deduction by 
reason of such expense. 

SEC. 7. The contract may provide that upon penalty of forfeiture 
of the benefits of the insurance the employee shall give reasonable and 
timely notice to his employer, to be fixed by the terms of the contract, 
of any accident which may entitle him to the benefits of such insurance, 
and that he shall submit himself to medical examination as required 
by the employer at the employer's expense. 

SEC. 8. The contract may provide that the premium payable by the 



APPENDICES 337 

employees shall be deducted from their wages. An employer who 
shall willfully and feloniously appropriate the amounts so deducted 
from the wages to any use other than the payment of insurance 
premiums as stipulated in the contract shall be guilty of embezzle- 
ment, and shall be punished accordingly. 

SEC. 9. The contract between the employer and employee may pro- 
vide that the insurance premiums shall be paid into the hands of a 
treasurer to be elected or appointed by the employees or by the 
employer and the employees in such manner and under such voting 
arrangements as the contract may specify. The payment of the 
premiums to the treasurer shall relieve the employer, and the penalty 
above prescribed for misappropriation of the funds required to be 
applied to insurance shall apply to such treasurer. 

SEC. 10. In case of non-payment of the premiums within one 
month after the same are payable, the insurance company shall within 
two months after the expiration of such month send notice of such 
default by mail to the insured and to the insurance superintendent 
of the state. The insurance policy or the contract between the 
employer or employee may specify a shorter period than the one 
herein provided for. Until the required notice shall have been sent, 
the policy shall not be forfeited for non-payment of the premium. 

SEC. n. The employer may also advance the premiums of insur- 
ance for such number of employees and at such rates as may be 
agreed upon between him and the insurance company, and may there- 
upon be supplied by the insurance company with blank policies to be 
filled in by him with the name of any beneficiary under the provisions 
of this act and to be executed by him as agent of such company; and 
he may thereupon reimburse himself for the amounts payable by the 
employee by deducting the same from the wages of such employee. 

SEC. 12. Such contract may provide that upon termination of his 
employment, from any cause whatever, the employee and his depen- 
dents shall cease to be entitled to the benefits of such insurance except 
as regards accidents occurring before the termination of his employ- 
ment. 

SEC. 13. Such contract may provide that any controversy regard- 
ing the extent of disability or the extent of dependency, or any con- 
troversy between dependents as to the amounts payable to them 
respectively, shall be settled by arbitration, the arbitrators to be 
named by the mutual consent of the parties, and should the parties 
fail to agree upon an arbitrator, then the arbitrator to be named by a 



338 INDUSTRIAL INSURANCE 

judge of the circuit court of the county in which the accident hap- 
pened, and the reward of such arbitrator shall be binding upon both 
the employer and the employee, or his dependents, as the case may be. 

SEC. 14. Any insurance paid in accordance with the provisions of 
this act shall not be liable to attachment by trustee, garnishee, or 
other process, and shall not be seized, taken, appropriated, or applied 
by any legal or equitable process, or by operation of law, to pay any 
debt or liability of the insured or any beneficiary, nor shall any claim 
to insurance money be assignable by the payee before the same is paid. 

SEC. 15. A contract for insurance in pursuance of the terms of this 
Act shall not relieve the employer from liability for any accident due 
to his failure to comply with the lawful directions of any competent 
administrative authority given in the interest of the safety of employees, 
unless it shall have been impossible to carry out such directions by the 
time that the accident happened, or unless the enforcement of such 
directions has been suspended by the order of a court of competent 
jurisdiction. 

SEC. 16. Every employer shall file with the insurance superintendent 
a copy of the form of contract and policy which he shall use under 
the provisions of this act, and in the event of such form being departed 
from in any particular case, shall also file a copy of such particular 
contract. If he shall fail to do so he shall be liable to a penalty of 
$50.00, in each case to be recovered in an action of debt in the name 
of the people of the state. 

SEC. 17. A quarterly report of all settlements and payments of 
insurance benefits shall be filed by the employer with the insurance 
superintendent. If such employer shall fail to make such report in 
thirty days after demand by the insurance superintendent, he shall be 
liable to a penalty of $50.00, to be recovered in an action of debt in 
the name of the people of the state. 

SEC. 18. The insurance superintendent shall prepare blanks of 
contract and policies complying with the provisions of this act and 
shall distribute the same upon application free of charge. 

SEC. 19. Nothing in this act contained shall be construed as author- 
izing any employer and any officer or agent of such employer to 
require any employee or any person seeking employment as a condition 
of such employment, or of the continuance of such employment, to 
enter into a contract, or to continue in such contract, such as is 
authorized to be made by sec. I of this act 



APPENDIX E 
CASUALTY INSURANCE COMPANY CONTRACTS 1 

The following are the forms of policies and applications as 
adopted by the Liability Conference, June, 1904, and now in use by 
the companies forming the conference. Thirteen liability companies 
are members of the conference, but the policies issued by them follow 
the same general lines. The character of the liability insurance con- 
tract, the extent of liability of the insuring company, and the duties of 
the insured in respect to such contracts are clearly set forth in these 
documents. 

FORM OF LIABILITY POLICY AND GENERAL AGREEMENTS 

The following skeleton, or general form of liability, and the con- 
ditions appended, are the same in all liability contracts approved by 
the Conference. Special agreements, or conditions, as given herewith, 
adapt this form to each class of the liability contract : 

In consideration of the application for this policy, a copy of which 
is hereto attached and which is made part of this contract, and of .... 
dollars ($..) premium, .... hereinafter called "the company," does 

hereby agree to indemnify . . . . , of . . . . , County of State of 

. . . . , hereinafter called "the assured," for the term of . . . . , beginning 
on the .... day of . . . . , at noon, and ending on the . . . . , day of 
. . . . , 190.., at noon, standard time, at the place where this policy has 
been countersigned. 

GENERAL AGREEMENTS 

This insurance is subject to the following conditions, which are to be 
construed as conditions precedent of this contract : 

1. The assured, upon the occurrence of an accident, shall give im- 
mediate notice thereof in writing, with full particulars, to the home office 
of the company, or to its duly authorized agent. He shall give like 
notices, with full particulars, of any claim which may be made on account 
of such accident. 

2. If thereafter any suit is brought against the assured to enforce a 
claim for damages on account of an accident covered by this policy, im- 
mediate notice thereof shall be given to the company, and the company 

1 Manual of Liability Insurance (March, 1905), pp. 39 ff . ; New York, 
The Spectator Co. 

339 



340 INDUSTRIAL INSURANCE 

will defend against such proceedings, in the name and on behalf 
of the assured, or settle the same at its own cost, unless it shall elect to 
pay to the assured the indemnity provided for in clause "A" of special 
agreements as limited therein. 

3. The assured shall not settle any claim, except at his own cost, nor 
incur any expense, nor interfere in any negotiation for settlement or in 
any legal proceeding without the consent of the company previously given 
in writing, but he may provide at the time of the accident such immediate 
surgical relief as is imperative. The assured, when requested by the com- 
pany, shall aid in securing information and evidence and in effecting 
settlements, and in case the company calls for the attendance of any 
employee or employees as witnesses at inquests and in suits, the assured 
will secure his or their attendance, making no charge for his or their 
loss of time. 

4. This policy does not cover loss from liability for injuries when 
the assured has failed to observe any statute affecting the safety of per- 
sons or has with knowledge violated any local ordinance made in the 
same behalf. 

5. This policy does not cover loss for liability for injuries to any 
child employed contrary to law, nor to any child so employed under 
fourteen years of age, where no statute restricts the age of employment, 
nor does this policy cover any injury due wholly or in part to the employ- 
ment of any such child. 

6. If the assured carry a policy of another insurer, whether valid or 
not, against a claim arising under this policy, he shall not be entitled to 
recover from the company a larger proportion of the loss than the sum 
hereby insured bears to the whole amount of insurance. If the assured 
has any other policy in this company, in respect of any injury covered 
hereby, the assured shall elect the policy under which the accident shall 
be treated, but the company shall not be held responsible for a liability 
under more than one policy. 

7. Any assignment of interest under this policy shall be void unless 
the written consent of the company is indorsed hereon by one of its officers. 

8. No action shall lie against the company as respects any loss under 
this policy unless it shall be brought by the assured himself to reimburse 
him for loss actually sustained and paid by him in satisfaction of a judg- 
ment after trial of the issue. No such action shall lie unless brought within 
the period within which a claimant might sue the assured for damages 
unless at the expiry of such period there is such an action pending 
against the assured, in which case an action may be brought against the 
company by the assured within thirty days after final judgment has been 
rendered and satisfied as above. In no case, except that of minors, shall 
any action lie against the company after the expiration of six years from 
the date of the given injuries or death. The company does not prejudice 



APPENDICES 341 

by this clause any defenses to such action which it may be entitled to make 
under this policy. 

9. In case of payment of loss under this policy, the company shall 
be subrogated to all claims or rights of the assured in respect to such loss 
against any person or persons, and the assured shall execute any and all 
papers required to secure to the company said rights. 

10. An agent has no authority to change this policy or to waive any 
of its provisions, nor shall notice to any agent or knowledge of his or of 
any other person be held to effect a waiver or change in this contract, or in 
any part of it. No change whatever in this policy nor waiver of any of 
its provisions shall be valid unless an indorsement is added hereto, signed 
by the president or secretary of the company, at its home office, express- 
ing such waiver or change. 

This policy shall cover losses sustained by and liability for any claims 
against the assured as a result of the risk specified in the contract or con- 
tracts hereto attached, and is issued and accepted upon the condition that 
all the provisions printed on the slip or slips attached to this policy are 
accepted and shall be fulfilled by the assured as part of this contract as 
fully as if they were recited at length over the signatures hereto affixed. 

In witness whereof, the .... company has caused this policy to be 
signed by its president and secretary, at . . . . , but the same shall not 
be binding upon the company unless countersigned by a duly authorized 
representative of the company. 

President Secretary. 

Countersigned at .... this day of . . . . , 190 

General Agent. 



WORKMEN'S COLLECTIVE INSURANCE 2 

Against bodily injuries sustained by any employee or employees of the 
assured through external, violent and accidental means, while actually 
engaged in the occupation and at the places mentioned in the schedule 
indorsed hereon, and resulting from the operation of the trade or business 
described in said schedule. 

SPECIAL AGREEMENTS 

Clause A. If the death of any employee shall result within ninety 
days from such injuries, independent of all other causes, the company will 
pay to the assured a sum equal to .... week's wages, computed at the 
rate per week received by such injured employee at date of accident, but 
such sum shall not exceed one thousand five hundred dollars. 

Clause B. If any employee shall, within ninety days, as the result of 
such injuries, independent of all other causes, lose by actual separation, 
at or above the wrists or ankles, both hands or both feet, one hand and one 
* Manual of Liability Insurance, as cited, p. 61. 



342 INDUSTRIAL INSURANCE 

foot, or shall irrecoverably lose the sight of both eyes, the company will 
pay to the assured the amount specified in Clause A. 

Clause C. If any employee shall, within ninety days, as the result of 
such injuries, independent of all other causes, lose by actual separation, at 
or above the wrist or ankle, one hand or one foot, the company will pay 
to the assured one-third the amount specified in Clause A. 

Clause D. If any employee shall, within ninety days, as the result of 
such injuries, independent of all other causes, irrevocably lose the sight 
of one eye, the company will pay to the assured, in satisfaction of all 
claims for such injury, a sum equal to one-eighth the amount specified 
in Clause A, but not exceeding two hundred dollars. 

'Clause E. If such injuries, independent of all other causes, shall 
immediately, continuously and wholly disable and prevent such employee 
from engaging in any work or occupation for wages, the company will 
pay to the assured an amount equal to one-half the usual weekly wages of 
the injured employee for the period of such disability, not exceeding 
twenty-six weeks in respect of any one accident, but such sum shall not 
exceed five hundred dollars in respect of any one injured person during 
the policy year. 

1. Recovery may be had for the benefit of the same employee under 
one of the foregoing clauses only as respects the results of injuries 
caused by any accident, and in no event shall the company's liability for 
a casualty, resulting in injuries to, or the death of several persons, exceed 
ten thousand dollars. 

2. The premium is based on the wages to be expended by the assured 
during the period of this policy. If the wages actually paid exceed the 
sum stated in said schedule, the assured shall pay the additional premium 
earned ; if less than the sum stated, the company will return to the assured 
the unearned premium, pro rata, but the company shall first retain not less 
than . . . dollars ($...), it being understood and agreed that this sum 
shall be the minimum earned premium under this policy. 

Issued by the .... company to .... 

Countersigned President Secretary. 

SCHEDULE 

i. Name of assured .... 2. Address of assured (name street, town, 

county, and state where office is located) 3. The locations of 

all factories, shops, or yards are given below .... 4. Trade or business 
is .... (state what the business is, giving the ratebook classification, 
specifically including character of work, etc.). 5. The application of 
employees are those usual and necessary to the trade or kind of business 
described above. 6. No power is used except as follows : .... 7. There 
are ... boilers. Their type is ... Their age is ... 8. There are 
. . . elevators. Their type is ... The maker's name is ... 9. No 



APPENDICES 



343 



chemicals are used, except as follows: ... 10. No explosives are used, 
except as follows: ... u. No stamping of sheet or other metal is done 
by power presses, except as follows : . . . (state number of power presses, 
if any) ... 12. The estimated pay-roll includes the wages of all executive 
officers, office men, piece-workers employed in the factories or shops, and 
all other employees, except as follows: ... 13. The employees whose 
wages are included in the following list do not make alterations or addi- 
tions to buildings or plant. They make no repairs, except as follows : . . . 
14. The following similar insurance is carried : Boiler, $ .... Name of 
company .... Employer's liability $ .... Name of company .... Ele- 
vator, $ .... Name of company .... 15. The insurances described 
in paragraph 14 cover the period for which this policy is written except 
as follows : . . . . 

1 6. The estimated average number of employees in each class or 
occupation and the estimated average annual wages in each description or 
class are given in the following list : 



Description of Occupation. 
(Only those usual and 
necessary to the business 
are covered by this 
policy.) 


Esti- 
mated 
Average 
Number 


Esti- 
mated 
Total 
Annual 
Wages 


Places Where Shops, 
Factories, or Yards Are 
Located 


Remarks 













17. The total expenditure for wages for the last calendar year, ended 
December 31, 190..., was $... 18. The estimated expenditure for wages 
for the term of this policy is $. . . The premium rate is. . . cents for each 
$100 of wages. The minimum premium is $... 

SURGEON'S CLAUSE 

In consideration of an additional premium of $..., being at the rate 
of $..., for every one hundred dollars ($100) of wages paid to the em- 
ployees, this policy, subject to all its agreements and conditions, is hereby 
extended so that the company will, at its own cost and expense, furnish to 
the injured employee, through its own surgeon, such medical attendance 
as may be considered by such surgeon necessary to the treatment of any 
injuries covered hereby. 

Dated . . . . , 190 ... Countersigned .... 



344 INDUSTRIAL INSURANCE 

GENERAL EXPOSURE CLAUSE 

In consideration of an additional premium of $..., being at the rate 
of $... for every one hundred dollars ($100) of wages paid to employees, 
this policy, subject to all its benefits, agreements, and conditions, is hereby 
extended to cover accidents to the employees of the assured insured here- 
under, occurring at any time or place during the continuance of this policy. 
Dated . . . . , 190 ... Countersigned .... 



APPENDIX F 

FORM OF AGREEMENT FOR LARGE FIRMS 1 

ARTICLES OF ASSOCIATION 

ARTICLE I 

NAME 

The undersigned, employees of the United Traction and Electric 
Company, or of companies owned, operated, or controlled by it, 
hereby form an association under the name of the United Traction 
Employees Mutual Aid Association. 

ARTICLE II 

OBJECT 

The object of this Association is to afford aid and relief to sick 
and disabled members and to the widows and children of deceased 
members. 

ARTICLE III 

% MEMBERS 

Membership in this Association shall be limited to employees of 
the following companies, namely: The United Traction and Electric 
Company, The. Rhode Island Company and companies owned, oper- 
ated, or controlled by them, or either of them. 

BY-LAWS 
ARTICLE I 

MEMBERSHIP 

SECTION i. Every employee of the United Traction and Electric 
Company, or of any company owned, operated or controlled by it, and 
every employee of the Rhode Island Company who is engaged in its 
street railway business wha shall make the weekly contributions here- 
inafter required, shall be a member of this Association so long as he 
remains such employee, or is in receipt of a pension from any of said 
companies, or of benefits from this Association. Provided, however, 
that neither elective officers of said companies nor temporary laborers 
on construction work shall be members. 

1 This form was drawn up under the direction of the actuary, Mr. 
M. M. Dawson. It is not recommended for employers of a small force 
of wage earners. 

345 



346 INDUSTRIAL INSURANCE 

SEC. 2. No certificate of membership shall be required, but proof 
of the fact that any person was, at a given date, eligible to member- 
ship, as provided in sec. I, and had duly made all the contributions 
required by these By-Laws, shall be evidence that such person was, 
on that date, a member of this Association and entitled to benefits as 
hereinafter provided. 

ARTICLE II 

BOARD OF TRUSTEES 

SECTION i. The management of this Association shall be vested 
in a Board of Trustees, which shall consist of seven persons. Until 
the first day of January, A. D. 1903, this board shall be composed of 
four persons to be elected by the directors of the United Traction 
and Electric Company and of the following members of this Associa- 
tion, viz. : George S. Apley, Frederick T. Nicholas, and Charles Young. 
From and after the first day of January, A. D. 1903, said board shall 
consist of four persons to be elected by the Directors of the United 
Traction and Electric Company before the first day of January of 
each year, and three persons to be chosen from their own number by 
the members of the Association in the following manner, viz. : Each 
member whose name is on a pay-roll shall give in his ballot to the 
paymaster at the time of payment of his wages next before December 
25 in each yean Members whose names are not on a pay-roll shall 
send in their ballots, with their names indorsed thereon, to the chair- 
man of the Board of Trustees. The paymaster shall also turn in all 
ballots received by him to the chairman of the board. The votes shall 
be counted by the board or under its supervision, at a meeting to be 
held for the purpose not later than December 30th; and the three 
members having the largest number of votes shall be declared elected. 

SEC. 2. From and after the first day of January, (A. D. 1903, the 
Board of Trustees shall hold their offices for the period of one year, 
beginning on the first day of January next succeeding the date on 
which they were chosen. Any vacancies in the number of the trustees 
chosen by the Directors of the United Traction and Electric Company 
may be filled by the remaining trustees chosen by said directors. And 
any vacancies in the number of the trustees chosen by the members 
of the Association may be filled by the remaining trustees chosen by 
said members. 

SEC. 3. The Board of Trustees shall meet at two o'clock P. M. on 
the first Thursday of each month at the office of the Union Railroad 
Company in the City of Providence; provided, that the board may 



APPENDICES 347 

change the time and place of such meeting, giving at least three days' 
notice of such change to each trustee. Special meetings may be called 
by the chairman and shall be called by the secretary upon request in 
writing of a majority of the board. At least three days' notice of 
such special meeting shall be given to each trustee. All notices shall 
be signed by the secretary, and shall be mailed, postpaid, to the several 
trustees at their addresses as last given to the secretary. 

SEC. 4. Four trustees shall constitute a quorum for the transaction 
of business. When at any meeting a less number than a quorum is 
present, they may adjourn the meeting, giving at least three days' 
notice of the time and place of such adjourned meeting to the absent 
trustees. 

SEC. 5. The Board of Trustees shall in the month of January in 
every year cause an audit and examination of the Association's accounts 
and condition to be made by a competent actuary who shall not be a 
member of said board, and shall issue a printed report for circulation 
among the members setting forth the receipts and disbursements for 
the previous year and the assets and liabilities on December 315!- thereof, 
and such other facts as they may deem advisable concerning the 
transactions and condition of the Association. 

ARTICLE III 

OFFICERS AND THEIR DUTIES 

SECTION i. The Board of Trustees shall, at their first regular meet- 
ing after their election, proceed to organize by the election of a chair- 
man, a treasurer, a secretary, and such other officers as they may 
deem necessary. All officers shall hold their offices during the pleasure 
of the board. 

SEC. 2. It shall be the duty of the chairman to preside at all 
meetings. 

SEC. 3. It shall be the duty of the secretary to keep a correct 
record of the proceedings of all meetings; to keep a correct account 
of the receipts and disbursements of the Association and to report the 
same to the Board of Trustees when required; and to give all notices 
required by the By-Laws. 

SEC. 4. It shall be the duty of the treasurer to receive and hold the 
funds of the Association, depositing the same in a bank or banks 
approved by the Board of Trustees, and disbursing moneys only upon 
the joint order of the chairman and secretary. It shall be required to 
give bond, approved by the board, in the sum of five thousand dollars 
for the faithful performance of his duties. 



348 - INDUSTRIAL INSURANCE 

ARTICLE IV 

CONTRIBUTIONS 

SECTION I. For the purpose of determining benefits and contribu- 
tions, the members of this Association shall be divided into three 
classes, as follows : 

Class First All members whose weekly earnings are less than 
nine (9) dollars. 

Class Second All members whose weekly earnings are nine (9) 
dollars or more but not so much as twelve (12) dollars. 

Class Third All members whose weekly earnings are twelve (12) 
dollars or more. 

The amount of wages paid the member for the week of his 
employment last previous to claim being made for death or disability 
benefit shall determine the class of the member; provided that in cases 
where, by reason of absence for part of the week, the wages fall 
below the usual figure, no change of class shall take place if the 
member make the contribution required in his proper class. 

SEC. 2. The contributions of members to the funds of the Asso- 
ciation shall be as follows : 

Class First Ten cents each week. 

Class Second Fifteen cents each week. 

Class Third Twenty cents each week. 

Such contributions shall be made each week during the receipt of 
benefits from the Association for sickness or accident as well as each 
week when the member is engaged in his employment; and also each 
week when the member is in receipt of a pension from either of the 
companies mentioned in Art. I, sec. i. 

ARTICLE V 

BENEFITS AT DEATH 

SECTION i. Upon proof of the death of a member from any cause 
except those mentioned in sec. 3 of this article, there shall be paid to 
his beneficiary or beneficiaries, as hereinafter provided, the following 
sum, according to the class of membership, viz., 

Member of the first class, five hundred (500) dollars. 

Member of the second class, seven hundred and fifty (75) dollars. 

Member of the third class, one thousand (1,000) dollars. 

SEC. 2. Said sums shall be paid, one-half to the widow or husband, 
and one-half to the children of the deceased; and if there be no children, 
the whole shall go to the'widow or husband, and if there be no widow 
or husband, to the next of kin, in the proportion provided by law in 



APPENDICES 349 

relation to the distribution of personal property left by persons dying 
intestate. 

Provided, however, that no person shall be entitled to receive any 
benefit upon the death of any member of this Association who was, 
at the time of his decease, in receipt of a pension from either of the 
companies mentioned in Art. I, sec. i ; except the widow or husband 
of such member. 

SEC. 3. No right to benefits shall accrue to any person upon the 
death of a member if such death is due wholly or in part, directly or 
indirectly, to intoxication or to the use of alcoholic liquors, as a 
beverage, or to the immoderate use of stimulants or narcotics; or to 
unlawful acts of immorality; or to venereal disease, however con- 
tracted; or to fighting, except in self-defense against unprovoked 
assault; or to any injury received in a liquor saloon, gambling-house, 
or other disreputable resort, or resulting from voluntary and unneces- 
sary exposure to danger of injury, contagion or infection, unless in 
pursuance of duty as an employee of some of the companies men- 
tioned in Art. I, sec. i. 

ARTICLE VI 

BENEFITS IN CASE OF DISABILITY 

SECTION i. Upon proof of the disability, as hereinafter defined, of 
a member from any cause which is not hereinafter declared to dis- 
qualify him from receiving benefits, there shall be paid to such mem- 
ber the following sum, according to the class of membership, viz., 

Member of the first class, four (4) dollars per week. 

Member of the second class, six (6) dollars per week. 

Member of the third class, eight (8) dollars per week. 

Provided, that if the total benefit insurance of any member, includ- 
ing that herein provided, exceeds his average weekly wages, the benefit 
to be received by such member from this Association shall be such 
proportion of the benefit hereinbefore specified as his average weekly 
wages bears to his total benefit insurance. 

SEC. 2. Disability is hereby defined as total incapacity to carry on 
any gainful occupation. But no benefits shall be paid for disability 
arising from any of the causes mentioned in sec. 3 of Art. V. of 
these By-Laws. 

SEC. 3. Benefits for disability shall be payable to the member so 
long as the disability continues ; provided, that no benefit for dis- 
ability shall continue to be paid after the person entitled to such 
benefit becomes entitled to a pension from any of the companies men- 
tioned in Art. I, sec. i. 



350 INDUSTRIAL INSURANCE 

SEC. 4. Members shall have no property in the several instalments 
of disability benefits until the same shall become payable, which shall 
be at twelve o'clock noon on each Thursday during the period of the 
member's disability. No assignment of such benefits shall be recog- 
nized by the Association. And if the right of the beneficiaries named 
in these by-laws to such benefits shall in any manner become alienated 
so that such beneficiaries cannot themselves receive the same, the 
obligation of the Association to pay such benefits shall thereupon 
cease. 

ARTICLE VII 

RELEASES 

SECTION I. In consideration of the agreement between the United 
Traction and Electric Company and this Association, and of the con- 
tributions to be made to the funds of this Association as provided by 
said agreement, and of the assumption by the Rhode Island Company 
of the obligations of the United Traction and Electric Company under 
said agreement, no benefit either for death or disability shall be pay- 
able except upon a receipt which shall contain a release in proper form 
to said United Traction and Electric Company and the several com- 
panies owned, operated or controlled by it, and to the Rhode Island 
Company from all liability to the beneficiaries on account of such 
death or disability, and of any injury, act, neglect, or omission by 
which such death or disability was caused. - 

SEC. 2. Should any member or any beneficiary of a member make 
any claim or bring any suit against said United Traction and Electric 
Company, The Rhode Island Company, or any company owned, oper- 
ated or controlled by them, or either of them, for damages because of 
any such death, disability, injury, act, neglect, or omission, or cause 
such claim to be made or suit to be brought, such member or bene- 
ficiary shall not be entitled to receive any benefits from this Associa- 
tion, unless such claim is abandoned or withdrawn or such suit dis- 
continued without trial. Any payment, compromise or settlement of 
such claim, or of any judgment under such suit shall cancel and 
nullify all the rights of such member or beneficiary to any benefits 
from this Association. 

ARTICLE VIII 

PROOFS OF DEATH AND DISABILITY 

SECTION i. To entitle to benefits for death of a member, proof of 
the fact and cause of death and of the identity of the deceased and 
the relationship of the beneficiary must be furnished within thirty (30) 



APPENDICES 351 

days after the death of the member upon blanks supplied by the 
Association. 

SEC. 2. To entitle to benefit for disability notice of such disability, 
specifying the nature of the same, must be given to the Association 
within thirty (30) days after the commencement of such disability. 
If such notice is given within two days after the commencement of 
such disability, benefits will accrue from the date of such commence- 
ment; otherwise, from the date of the notice only. The disabled 
member must at any and all times permit a physician or physicians 
selected by the Association to examine him. And a refusal at any 
time to permit such examination shall forfeit all right to further bene- 
fits until such examination is permitted. 

SEC. 3. The Board of Trustees shall determine the right of any 
member or beneficiary to benefits or may delegate this power to any 
person or persons whom it may select. Any determination by any 
person or persons so selected, of the right of any member or bene- 
ficiary to a benefit, shall be reviewed by the board upon application of 
any member of said board, or of the member or beneficiary of the 
Association who is interested in such benefit. In all cases where the 
question of the payment of a benefit is decided by the board, whether 
originally or on review, it shall be necessary, in order that the benefit 
shall be paid, that a majority of all the trustees shall concur in order- 
ing such payment. 

ARTICLE IX 

APPLICATION OF SURPLUS FUNDS 

SECTION I. The Board of Trustees may at its discretion apply any 
surplus of funds which the Association may from time to time be 
found to possess, in any one or more of the following ways : 

First, To pay partial benefits for partial disability. 

Second, To increase the benefits for death or disability or both. 

Third, To diminish the contributions of the members, ratably. 

SEC. 2. In event such surplus or part thereof be applied to pay 
partial benefits for partial disability, the Board of Trustees shall have 
power to determine both who are entitled thereto and the amount of 
benefit which shall be paid in each case. 

ARTICLE X 

FORFEITURE OF MEMBERSHIP AND BENEFITS 

SECTION i. It being the aim and purpose of this Association to 
provide benefits only for employees of the Rhode Island Company, the 
United Traction and Electric Company and of companies owned, oper- 



352 INDUSTRIAL INSURANCE 

ated and controlled by them or either of them and to secure the benefits 
provided by the foregoing by-laws to such employees at the current cost 
of the same, less the contributions to be made as provided by contract 
with this Association, by said United Traction and Electric Company 
and by the Rhode Island Company, by virtue of its assumption of said 
contract, it is hereby expressly declared that every member who shall 
cease from any cause to be an employee of said company or com- 
panies, or of some of them, shall thereupon cease to be a member of 
this Association; and that he and each and every of his beneficiaries 
shall thereupon forfeit all right, title and interest, if any he or they 
had, in or to funds held by said Association, and all right or claim 
to receive any benefits from said Association; provided, however, that 
nothing in this article contained shall affect the provisions heretofore 
made by these By-laws for members and the beneficiaries of members, 
who, while not actually in the employ of any of the companies men- 
tined in Art. I, sec. I, are in receipt of benefits from this Association 
for total disability, or of a pension from some of said companies ; and 
provided further, that temporary suspension, or temporary absence from 
duty on leave, shall not be construed as a termination of a member's 
employment. 

ARTICLE XI 

AMENDMENTS 

SECTION i. These By-laws may be altered or amended at any regu- 
lar meeting of the Board of Trustees, or at a meeting called for the 
purpose, provided that written notice has been given to each trustee 
of the purpose to so amend and that the amendment or altered by-laws 
are passed by a majority vote of the entire board. 

CONTRACT 

UNITED TRACITON AND ELECTRIC COMPANY 

WITH 

UNITED TRACTION EMPLOYEES MUTUAL AID ASSOCIATION 
WHEREAS, an Association has been organized under the name of 
the United Traction Employees Mutual Aid Association by employees 
of the United Traction and Electric Company and of various com- 
panies owned, operated or controlled by it, and 

WHEREAS, the purposes and objects of said Association are, as 
more fully set forth in its Constitution and By-laws (to which refer- 
ence is hereby made), to furnish benefits during the disability of its 
members and benefits to dependents upon the death of a member, and 



APPENDICES 353 

WHEREAS, The United Traction and Electric Company is desirous 
of aiding in the accomplishment of the purposes and objects of said 
Association and of co-operating with said Association in securing to 
its members and the several companies by which they are employed, 
the mutual advantages to be derived from such an Association, and of 
providing in this manner, an additional inducement and compensation 
to the employees of said companies for faithful and meritorious ser- 
vice, and 

WHEREAS, the said Association is desirous of such aid and 
co-operation of the United Traction and Electric Company. 

Now, THEREFORE, this agreement, made this nineteenth day of Octo- 
ber, A. D. 1901, by and between the said United Traction and Electric 
Company (hereinafter called "the Traction Company" and the said 
United Traction Employees Mutual Aid Association (hereinafter 
called "the Association") WITNESSETH : 

First The Association agrees that its management shall always be 
vested in a board of seven trustees, four of whom shall be chosen by 
the directors of the Traction Company; and that the contributions col- 
lected from members, and the payments made to members or other 
beneficiaries for death or disability benefits shall be such and shall 
be made upon such terms and conditions as are prescribed by the 
By-laws of said Association now in force (a copy of which, marked 
"Exhibit A," is hereto annexed and made a part hereof), and any 
amendments thereof adopted in the manner therein provided; and that 
the proceedings and government of said Association shall be in con- 
formity with said By-laws and amendments. 

Second The Traction Company agrees to contribute to the funds 
of the Association as follows, viz. : 

1. One hundred (100) of each five hundred (500) dollars payable 
at the death of a member of the first class; one hundred and fifty 
(150) dollars of each seven hundred and fifty (750) dollars payable 
at the death of a member of the second class; and two hundred (200) 
dollars of each one thousand (1,000) dollars payable at the death of a 
member of the third class. 

2. One-fourth of the amount of contributions by the members, 
payable weekly as the said amount may be determined. 

3. Sums, from time to time, sufficient to meet the current expenses 
of management, including expenses of adjusting and litigating claims, 
and 

4. Sums equal to the deficiencies which may at any time be found 



354 INDUSTRIAL INSURANCE 

to exist in the funds of the said Association; provided that contribu- 
tions to make good any such deficiencies shall be repaid out of any 
surplus of such funds as may thereafter be accumulated. 

Third The Traction Company further agrees to make collection 
of the contributions of the members of the Association by deducting or 
causing to be deducted from their wages, pensions, or disability benefits 
as the case may be, the amount of such contributions, as fixed by the 
By-laws of the Association; and to turn over, or cause to be turned 
over to the Association the full proceeds of such collection without 
deduction or charge. 

Fourth This agreement shall remain in full force and effect until 
all obligations for benefits assumed by the Association in accordance 
with its By-laws are discharged; provided, however, that modifications 
may be made at any time and from time to time, if approved by all 
the trustees of the Association and a majority of the directors of the 
Traction Company. 

IN WITNESS WHEREOF, the said United Traction and Electric Com- 
pany has caused its name to be hereto subscribed and its seal to be 
hereto affixed, by Marsden J. Perry, its vice-president, thereunto duly 
authorized, the day and year first above written; and in like witness 
the said United Traction Employees Mutual Aid Association has, on 
the same day, caused its name to be hereto subscribed and its seal to 
be hereto affixed by Cornelius S. Sweetland, its treasurer, thereunto 
duly authorized. 

UNITED TRACTION AND ELECTRIC COMPANY 

By Marsden J. Perry, Vice-President (SEAL) 
UNITED TRACTION EMPLOYEES MUTUAL AID ASSOCIATION 

By Cornelius S. Sweetland, Treasurer (SEAL) 

In presence of : Walter F. Angell. 



APPENDIX G 

RULES OF SWIFT & CO. EMPLOYEES BENEFIT 

ASSOCIATION 
Effective July i, 1907 

GENERAL 

1. The object of Swift & Company Employees Benefit Association 
is the establishment and management of a fund for the payment of 
definite amounts to such employees as contribute thereto, who shall be 
known as "Members of the Benefit Association," when, under the 
rules, they are entitled to such payment by reason of disability, or, 
in the event of their death, to the relatives or other beneficiaries 
designated. 

2. Whenever in these rules the following words occur without 
qualification they shall h?ve the meaning here given: "President" and 
"Board of Directors" shall mean respectively the President and Board 
of Directors of Swift & Company, an Illinois corporation, its suc- 
cessors or assigns. "Benefit Association" shall mean Swift & Company 
Employees Benefit Association. "Manager," "Medical Director" and 
"Medical Examiner," shall mean the Manager, Medical Director and 
Medical Examiner respectively of said Benefit Association. 

3. The Benefit Fund shall consist of contributions from members 
of the Benefit Association, income from investments and money 
advanced by Swift & Company, when necessary to pay benefits as they 
become due. 

4. As Swift & Company have agreed with the Trustees of the 
Benefit Association to pay the operating expenses thereof and to make 
good any deficiency in its funds to meet obligations to members, the 
contributions from members shall be used only for the payment of 
benefits due to members of the Benefit Association. 

5. There shall be an Advisory Committee as follows: 

The Treasurer of Swift & Company shall be ex officio a member 
and Chairman of the Committee. 

The other members of the Committee shall be chosen annually, in 
November, to serve for one year from the first day of January next 
succeeding and until their successors shall be chosen and take office, as 
follows : 

355 



356 INDUSTRIAL INSURANCE 

Seven shall be chosen by the Board of Directors and seven by the 
employees who are members of the Benefit Association from among 
themselves, one representative from the Chicago plant and one from 
each of the other plants in rotation, so that each plant shall in its turn 
be represented. 

Ten members shall constitute a quorum of the Committee for the 
transaction of business. 

6. The members of the Committee chosen by the members of the 
Benefit Association shall be elected by ballot from the respective plants 
and on such date in November as the Advisory Committee shall 
designate. The polls shall be open during the business hours of the- 
date designated and the vote shall be taken and certified under oath 
by tellers selected by the Committee. 

For the Committee to serve during the first fiscal year the mem- 
bers to represent the contributing employees shall be appointed by the 
President. 

In the event of the termination of service of any member of the 
Committee, or of his withdrawal from membership in the Benefit 
Association, his membership in the Committee shall thereupon termi- 
nate. Any vacancy among the members of the Advisory Committee 
elected by contributing employees shall be filled by the member of the 
same packing plant who shall have received the next highest number 
of votes to the retiring member, and in the event that no one shall be 
eligible to fill such vacancy, a member from the same packing plant 
shall be designated by the President. 

Any vacancy among the members chosen by the Board of Directors 
shall be filled by appointment of the President. 

Members shall serve until their successors are chosen and take 
office as provided. 

The Manager shall be Secretary of the Committee. 

7. The Committee shall have general supervision of the operation 
of the Benefit Association and shall see that it is conducted according 
to the Rules. 

The committee shall hold stated meetings, quarterly, at Chicago, 
on the second Thursday of January, April, July, and October in each 
year, and shall meet at other times at the call of the Chairman. It 
shall be the duty of the Chairman to call special meetings of the Com- 
mittee upon the written request of five (5) of its members. The neces- 
sary expenses of members of the Committee while engaged on the 
business of the Benefit Association, or traveling to or from meetings 



APPENDICES 357 

of the Committee, and the pay or wages of such members for such 
time shall be included in the expenses of the Benefit Association 
assumed by Swift & Company. 

8. The Manager shall have charge of all business pertaining to the 
Benefit Association. He shall employ such clerks and other assistants 
as may be necessary, prescribe the forms and blanks to be used, certify 
all bills and pay-rolls of the Benefit Association, furnish the Commit- 
tee such reports as they may require, decide all questions properly 
referred to him, and exercise such other authority as may be con- 
ferred on him by the Trustees or the Committee. 

9. There may be an Assistant Manager, who shall exercise all the 
authority of the Manager, in his absence, and shall at all times perform 
such other duties as may be assigned to him by the Trustees, Com- 
mittee, or Manager. 

10. There shall be a Medical Director who shall, subject to the 
approval and control of the Manager, appoint Medical Examiners, 
assign them to locations, direct their work and have general super- 
vision of the medical and surgical affairs of the Benefit Association. 
The Medical Director may be the same person as the Manager or 
Assistant Manager. 

The Manager, Assistant Manager, and Medical Director shall be 
appointed by the Trustees. 

11. The Medical Examiners shall make the required physical 
examination of applicants for membership in the Benefit Association, 
prepare applications, report the condition of sick or injured members, 
decide when members are disabled, and when they are ready for work, 
certify bills for surgical treatment, perform such other duties as may 
be required of them by the Medical Director and conform to such rules 
as he may establish. 

12. Whenever used in these rules the words "Medical Officers" 
shall be held to mean the Medical Examiner in charge of any case, and 
the Medical Director. 

13. The fiscal year of the Benefit Association shall begin with the 
first day of January of each year. 

At the close of each fiscal year the accounts of the Benefit Fund 
shall be audited, and the condition of the Fund reported by competent 
person or persons selected for that purpose by those members of the 
Committee who represent the members of the Benefit Association. 

14. Amendments to the rules of the Benefit Association may be 
proposed to the Committee at any quarterly meeting by any member 




358 INDUSTRIAL INSURANCE 

of the Committee. Amendments so proposed may be acted upon only 
at a subsequent meeting. No amendment shall be operative unless 
adopted by the affirmative vote of two-thirds of all the members of 
the Committee, approved by the Board of Directors and duly certified 
by the Manager to the Trustees. Any amendment so adopted, approved 
and certified shall be announced by the Manager and shall be binding 
upon the Trustees, and upon the members of the Benefit Association, 
and all persons claiming through them from the date specified in the 
announcement thereof. 

MEMBERSHIP 

15. All employees of Swift & Company who are contributing to 
the Benefit Fund shall be called "Members of the Benefit Association." 

16. There shall be eight (8) classes of members. 

The highest class in which an employee may be a member shall be 
determined by his regular or weekly pay, as per schedule. 

For employees paid by the hour, piece, or in any other way than by 
the week, the highest class shall be determined by the usual amount of 
earnings in a week. 

17. No employee shall be required to become a member of the 
Benefit Association. 

18. Any employee may, upon passing a satisfactory medical exami- 
nation and the approval of his application by the Manager, become a 
member in the highest class allowed by his pay or in any lower class. 
Any employee over forty-five years of age who entered the employ of 
Swift & Company prior to January i, 1907, may, on or before Decem- 
ber 31, 1907, upon passing a satisfactory medical examination and 
approval of his application by the Manager, become a member in the 
highest class allowed by his pay at the same rates as are prescribed 
for members under forty-five years of age. 

Any member forty-five years of age or over who does not take 
advantage of this provision on or before December 31, 1907, or who 
enters the employ of Swift & Company on or after January i, 1907, 
may become a member in the highest class allowed by his pay at the 
rates provided in the schedule for employees forty-five years of age 
and over. 

ADDITIONAL DEATH BENEFITS 

19. A member, upon executing the proper form of application, and 
passing a satisfactory medical examination and approval of his appli- 
cation by the Manager, may contribute as per schedule for additional 



APPENDICES 359 

death benefits not greater in the aggregate than the death benefit of 
the class he enters. 

20. Any member not over forty-five years of age may, upon exe- 
cuting the proper form of application and passing a satisfactory medical 
examination, and approval of his application by the Manager, change 
to any higher class allowed by his pay. 

21. Any member may, upon executing the proper form of applica- 
tion, change to a lower class. 

22. An employee cannot remain a member in a class higher than 
that allowed by his pay except as to death benefit. If a member 
declines to effect a proper reduction of class when necessary, the 
Manager shall have authority to cancel his membership. 

23. Any member may withdraw from the Benefit Association at 
the end of any week upon giving notice before Tuesday of that week. 

24. Any member who is temporarily relieved from service for a 
period not exceeding four weeks may retain his membership during 
such absence by paying his contributions in advance. 

25. When a member resigns from the service, leaves the service 
without notice, or is relieved or discharged therefrom (or is relieved 
from service for a period longer than four weeks), his membership in 
the Benefit Association shall cease with his employment, and he shall 
not be entitled to any benefits for time thereafter, except such as he may 
be entitled to by reason of disability beginning and reported before 
and continuing without interruption to and after such termination of 
employment; provided, however, that any member who has been in 
the employ of Swift & Company for three years, and a member of 
the Benefit Association for one year immediately preceding the termi- 
nation of his employment, may continue his membership thereafter in 
respect only of the minimum death benefit he has held at any time 
during the last year of such employment, or of any smaller amount 
upon making supplementary application therefor on the prescribed 
form before termination of employment or within five days thereafter. 

26. Membership in the Benefit Association shall be based upon 
an application in the following form: 

APPLICATION FOR MEMBERSHIP IN SWIFT & COMPANY EMPLOYEES 
BENEFIT ASSOCIATION 

To the Manager of Swift & Company Employees Benefit Association: 

I, of , in the County of and State of , 

now employed by Swift & Company, do hereby apply for membership 
in Swift & Company Employees Benefit Association, and consent and 



360 INDUSTRIAL INSURANCE 

agree to be bound by the Rules of said Benefit Association, which Rules 
I have read or have had read to me, and by any other Rules of said Benefit 
Association hereafter adopted and in force during my membership, and 
by the provisions of the Deed of Trust governing the organization of the 
Benefit Association, and the amendments thereto. 

I also agree, request and direct that Swift & Company, by its proper 
agents, and in the manner provided for in such Rules, shall apply as a 
voluntary contribution from any wages earned by me under said employ- 
ment the sum of ($ -100) per week, for the purpose of securing 

the benefits provided in the Rules for a member of the Benefit Association 

of the class with additional death benefits of the first class. 

Unless I shall hereafter otherwise designate in writing, with the approval 
of the Manager of the Benefit Association, death benefit shall be payable 
to my wife (husband), if I am married at the time of my death; or if I 
have no wife (husband) living, then to my children, collectively, each to be 
entitled to an equal share, encluding, as entitled to the parent's share, the 
issue of any dead child; or if there be no children or such issue living, 

then to if living ; and if not living, to "my father and mother 

jointly, or their survivor; or if neither be living, then to my next of kin, 
payment in behalf of such next of kin to be made to my legal representa- 
tives ; or if there be no such next of kin, the death benefit shall lapse, and 
the amount thereof shall remain as part of the Benefit Fund, and no one 
claiming under me shall have any right or interest therein. 

I also agree that this application, upon the approval of the Manager of 
the Benefit Association, shall make me a member of the Benefit Associa- 
tion on and from the date specified in such approval, and that such 
membership shall not be avoided by any change in the character of my 
service, or locality where rendered, while in the employment of said 
Swift & Company, nor by any change in the amounts applicable from my 
wages to the Benefit Fund to which I may hereafter consent, and that the 
agreement that the above named amounts shall be deducted from my 
wages shall apply also to any other amounts which I may agree to pay 
under the provisions of said Rules, by reason of changes made as aforesaid. 

I also agree, for myself and those claiming through me, to be governed 
by the Rule, or Rules, providing for final and conclusive settlement of all 
claims for benefits or controversies of whatever nature by reference to 
the Manager of the Benefit Association, and an appeal from his decision 
to the Advisory Committee. 

I certify that I am correct and temperate in my habits ; that, so far 
as I am aware, I am now in good health, and have no injury or disease, 
constitutional or otherwise, except as shown on the accompanying state- 
ment made by me to the Medical Examiner, which statement shall constitute 
a part of this application. 

I also agree that any untrue or fraudulent statement made by me to 



APPENDICES 361 

the Medical Examiner, or any concealment of facts in this application, or 
any attempt on my part to defraud or impose upon said Benefit Association, 
or my resigning from or leaving the service of said Swift & Company, 
or my being relieved or discharged therefrom, shall forfeit my membership 
in the said Benefit Association, and all rights, benefits, or equities arising 
therefrom ; except that such termination of my employment shall not (in 
the absence of any of the other foregoing causes of forfeiture) deprive me 
of any benefits to the payment of which I may be entitled by reason of 
disability, beginning and reported before and continuing without interrup- 
tion to and after such termination of my employment, nor of the right to 
continue my membership in respect of death benefit only, as provided in 
said Rules. 

In witness whereof, I have signed these presents at , in the 

County of , State of , this day of A. D. 190 

this application to take effect on such date as may be designated by said 
Manager. 

The following changes made before said execution : 

Witness : 

The foregoing application is approved at the office of the Manager of 
Swift & Company Employees Benefit Association at Chicago, in the County 

of Cook, State of Illinois, this day of A. D. 190...., to 

take effect the day of , A. D. 190. . .. 



Manager of Benefit Association 

The application, accompanied by the report of the Medical Exami- 
ner, shall be forwarded to the Manager, and, upon approval by him, 
the applicant shall become a member from as early a date as notice 
of approval can reach him and the Manager shall issue to him a 
certificate of membership. 

27. If any applicant for membership or for change in membership 
has physical defects which would preclude the approval of his appli- 
cation, if presented unconditionally, his application may nevertheless 
be approved; provided, that he executes an agreement in writing, 
satisfactory to the Manager, to the effect that he shall not be entitled 
under his membership to any benefits for disability caused by, arising 
from, or growing out of such defects, such agreement to be attached 
to and to be made a part of his said application, and such modification 
of the prescribed forms of application is hereby authorized. 

28. The application of a married woman must be signed also by 
her husband, and that of a minor by the father, or if the father be 



362 INDUSTRIAL INSURANCE 

not living or be not the head of the family, by the mother or the 
legal guardian unless otherwise ordered by the Manager. 

CONTRIBUTIONS 

29. The word "Contributions'' wherever used in these Rules shall 
be construed to mean such designated portion of the wages payable by 
Swift & Company to an employee as he shall have agreed in his appli- 
cation that Swift & Company shall apply for the purpose of securing 
to him the benefits of the Benefit Association, or such cash payment 
as it may be necessary for a member to make for said purpose. 

30. Contributions shall be made weekly or fortnightly in advance 
at rates as provided for in schedule. Contributions from members 
not in service but continuing death benefit shall be payable quarterly 
in advance. 

31. Contributions for any week or fortnight will be due on the 
first day of that week or fortnight, and will ordinarily be deducted 
for the ensuing week or fortnight from the member's wages on the 
pay-roll for the preceding week or fortnight. 

When a member has no wages on the pay-roll any contributions 
clue from him must be made in cash, otherwise he will be in arrears. 
A member in the service shall make such cash payments to the 
Manager through the Cashier of the plant at which he belongs. 

A member who has left the service and is contributing for death 
benefits only shall make such cash payments direct to the Manager. 

32. Benefits shall not be due on account of disability beginning or 
death occurring while a member is in arrears. 

When a member is in arrears for two months his membership 
shall cease and he shall have no further right or claim against the 
Benefit Association. 

33. When a member recovers from his disability his contributions 
for the week in which he recovers, if not already paid, together with 
his contribution for the following week or fortnight, shall be deducted 
from the pay-roll of the week in which he recovers. 

34. A member shall not make contributions for any time of disa- 
bility beyond the week or fortnight in which disability begins, except 
as specifically provided in the Rules. When wages are paid during 
disability the usual contributions shall be made. 

35. When a member's service terminates there shall be due him as 
refund any excess of contribution he may have made above what is 
necessary to adjust his account up to the termination of his service. 



APPENDICES 363 

Any such refund shall be payable upon application therefor by the 
member. 

DISABILITY 

36. Wherever used in these rules the word "Disability" shall be 
held to mean physical inability to work by reason of sickness or acci- 
dental injury, and the word "Disabled" shall apply to members thus 
physically unable to work. 

The decision as to when members are disabled and when they 
x$re able to work shall rest with the Medical Officers of the Associa- 
tion, and their decision shall be final and binding upon the member, 
subject to the provisions of sec. 52. 

In considering the question of disability, subjective symptoms or 
alleged symptoms will be given due weight, but these, in themselves, 
unsupported by objective or discoverable symptoms, shall not entitle 
a member to be considered disabled. 

BENEFITS 

The following benefits shall be paid to members or beneficiaries 
entitled thereto, in accordance with the provisions of the Rules. 

ACCIDENT BENEFITS 

37. Payment for each week (or, proportionately, for part of a 
week, excluding Sunday) of disability classed as due to accident for 
a period not longer than 104 weeks, at benefits as per schedule. Also 
payment to or in behalf of the member of such an amount for neces- 
sary surgical treatment as may be approved by the Medical Director. 
No member shall have authority to contract bills against the Benefit 
Association and nothing herein shall be held to mean or imply that 
the Benefit Association shall be responsible for the payment of such 
bills as a member may contract, or his surgeon may charge. Bills 
for surgical attendance to be considered by the Benefit Association 
must be made out against the member and must be itemized. To 
establish a claim for accident benefits, the accident must be reported 
immediately upon its occurrence, and there must be external positive 
and visible evidence of physical injury by accident sufficient to cause 
immediate disability. In cases of alleged sprain, strain, wrench, and 
the kind, where physical proof of disabling injury is lacking, the 
member must furnish substantiated history satisfactory to the Man- 
ager, of violence accidentally inflicted, sufficient and liable to cause 
disabling injury, otherwise accident benefit will not be allowed. 

When a member meets with any accident from which disability 



364 INDUSTRIAL INSURANCE 

may result and on account of which he wishes to reserve the right to 
claim accident benefits, he shall report the accident to his timekeeper 
immediately upon its occurrence, and also report in person to the 
Medical Examiner the same as is provided in cases of actual 
disability. 

If a member receives accidental injuries producing the immedi- 
ate severing of, or- necessitating, in the opinion of the Medical Officers 
of the Benefit Association, the amputation of a hand or foot at or 
above the wrist or ankle, he may either receive weekly benefits and 
payment of surgical bills, as hereinbefore provided, also an artificial 
limb, when such can be worn, or in lieu thereof and in full of all 
claims or demands of whatsoever nature against the Benefit Asso- 
ciation, arising from such injuries, he may receive as per schedule 
and twice these benefits are provided in schedule in case of loss of 
both hands or both feet, or of one hand and one foot. 

If a member receives accidental injuries resulting in the total loss 
of sight of one eye, he may either receive weekly benefits and payment 
of surgical bills, as hereinbefore provided, or in lieu thereof and in 
full of all claims or demands of whatsoever nature against the Benefit 
Association, arising from such injuries, he may receive as per schedule 
and twice these benefits are provided in schedule in case of total loss 
of sight of both eyes. 

SICK BENEFITS 

38. Payment for each week, except the first six working days 
(or proportionately for part of a week, excluding Sundays) of disa- 
bility classed as due to sickness, for a period not longer than fifty- 
two weeks, at the same benefits as for accident benefits, and at half 
such benefits for an additional period of fifty-two weeks. 

When a member shall have received full benefits for fifty-two 
weeks and half benefits for fifty-two weeks additional for sickness 
disability from the Benefit Fund, he shall not be entitled to further 
disability benefits. 

To establish a claim for sick benefits there must be positive evi- 
dence of acute or constitutional disease sufficient to cause disability. 

Disability resulting from infection of a cut, abrasion, scratch, 
puncture or other wound, or from any injury not immediately dis- 
abling and not reported at the time of the accident causing the injury, 
or from poison however taken into or acting upon the body, or from 
any overdose of medicine or drug taken by mistake; or from sur- 
gical operation necessary for the removal of some defect, which 



APPENDICES 365 

would otherwise produce disability, or from sunstroke, or frostbite 
shall be classed as due to sickness. 

39. A member shall not be entitled to receive benefits continuously 
for more than 104 weeks for any disability. 

40. A member who has received sick benefits to the full extent 
contemplated by these Rules, may retain his membership in respect 
to death benefit only by contributing for the same, such contributions 
to begin at the expiration of his right to sick benefits, otherwise his 
membership shall cease. 

41. In case of any grave injury or chronic sickness where a mem- 
ber desires to accept a lump sum in lieu of the benefits which might 
become due him or on his account, and in full of all obligations of 
the Benefit Association arising from his membership, the Manager 
shall have authority to make full and final settlement with such mem- 
ber on such terms as may be agreed upon in writing. All such 
settlements shall be reported to the Committee at their next meeting. 

42. Benefits on account of continued disability will be paid fort- 
nightly. Benefits for short periods of disability will be paid as soon 
as the amount due can be ascertained. 

Benefits shall be payable only to the disabled member or in 
accordance with his written order, when approved by the Manager or 
his legal representative; but payment for surgical treatment may be 
made to the attending surgeon. 

When, in the opinion of the Manager, a member is legally incom- 
petent, disability benefits due him may, at the discretion of the 
Manager, be paid to his wife or to some other member of his family 
for the use and benefit of the member, and such payments shall be 
made a bar to any subsequent claim on the part of the member or his 
legal representative for amounts so paid. 

43. When a member becomes disabled, he shall notify his time- 
keeper immediately or cause him to be notified. In reporting dis- 
ability, the member shall give his house address. If he fails to give 
notice until he recovers, he shall not be entitled to benefits unless he 
proves his disability to the satisfaction of the Manager, and gives 
satisfactory reason for failure to give notice. If, he gives notice 
during disability, but delays in so doing, he shall not be considered 
disabled before the day on which notice is given, unless he proves 
his disability before that day to the satisfaction of the Manager, and 
gives satisfactory reason for delay in giving notice. 

When a member becomes disabled he shall, also, unless unable on 



366 INDUSTRIAL INSURANCE 

account of his disability, report immediately to the Medical Examiner 
at his office during business hours. A disabled member not confined 
to the house by his disability, shall also report at the Medical Exami- 
ner's office from time to time as requested, and keep any other 
appointments made by the Examiner. Members who avoid the 
Medical Examiner or neglect to report or keep appointments shall not 
be entitled to benefits. 

If a member who has been reported as able to work by the 
Medical Examiner, is not able to work on the day set, he shall 
immediately notify his timekeeper, and the Medical Examiner, and 
report to the latter in person, if possible; otherwise he shall not be 
considered disabled after the day set for his return to work. 

44. When a member becomes disabled when away from home, 
whether on business for Swift & Company or leave of absence, he 
shall not be entitled to benefits unless he reports his disability immedi- 
ately and proves it to the satisfaction of the Manager. 

45. When a disabled member wishes to leave home, he shall 
obtain from the Medical Examiner written approval of absence for a 
specific time, shall furnish him satisfactory proof of disability, while 
absent, and report immediately to him on his return, otherwise he 
shall not receive benefits while absent. 

46. Benefits shall not be payable for disability directly, indirectly 
or partly due to intoxication, or to use of alcoholic liquors as a 
beverage, or to immoderate use of stimulants or narcotics, or to 
unlawful acts or immoralities, or to venereal diseases, however con- 
tracted, or to the results thereof, or to urethritis, orchitis, epididy- 
mitis, stricture, or glandular swelling, or abscess in the groin, how- 
ever caused, or to fighting, unless in self-defense against unprovoked 
assault, or other encounter, such as wrestling, scuffling, fooling and 
the like, or to injury received in any brawl, or in any liquor saloon, 
gambling house or other disreputable resort. 

During disability coming under this Rule a member shall con- 
tribute for and be entitled to death benefit only. 

47. Members shall not be entitled to benefits if they decline to 
permit the Medical Examiner to make or have made by any other 
physician, such examination as he may deem necessary to ascertain 
their condition when claiming disability. 

Disabled members must take proper care of themselves and have 
proper treatment. Benefits will be discontinued to members who 
refuse or neglect to follow the recommendations of the Medical 
Officers. 



APPENDICES 367 

DEATH BENEFITS 

48. Payment in accordance with the conditions prescribed in the 
Rules upon the death of a member, as per schedule. 

49. Death benefit, together with any unpaid disability benefits, 
shall be payable to the beneficiary of a deceased member upon proof 
of claim. A part of the death benefit, not to exceed $100, may, at 
the discretion of the Manager, be paid before final settlement to 
meet funeral or other urgent expenses, incident to the death of a 
member. 

50. If a member commits suicide before the end of the first year 
of his membership, the beneficiary shall, upon proof of claim, receive 
such amount only as such member has contributed for death benefit 
under the Rules at time of death, and such amount shall be in full 
satisfaction of all claims. 

51. Claims for disability benefits must be made within thirty (30) 
days of the time such benefits accrue. Claims for death benefits must 
be made within two (2) years from the death of the member. 

CONTROVERSY 

52. In any controversy, claim, demand, suit-at-law, or other pro- 
ceeding between any member, his beneficiary or legal representative, 
and the Benefit Association, the certificate of the Manager as to any 
facts appearing in the records of the Benefit Association, or of Swift 
& Company, or that any writing is a copy taken from said records, 
or of any instrument on file in said Benefit Association, or with 
Swift & Company, or that any action has or has not been taken by 
the Committee, or the Board of Directors, shall be prima facie evi- 
dence of the facts therein stated. 

All questions or controversies of whatsoever character arising 
in any manner, or between any parties or persons, in connection with 
the Benefit Association or the operation thereof, whether as to any 
claim for benefits preferred by any member or his legal representa- 
tive or his beneficiary or any other person, or whether as to the con- 
struction of language or meaning of the Rules, or as to any writing, 
decision, instruction or acts in connection with the operation of the 
Benefit Association, shall be submitted within sixty (60) days of the 
time of the decision from which an appeal is taken, to the Manager, 
whose decision shall be final and conclusive, unless an appeal from 
such decision shall be taken to the Committee within thirty (30) days 
after notice of such decision to the parties interested. 



368 INDUSTRIAL INSURANCE 

When an appeal is taken to the Committee it shall be heard by 
said Committee without further notice at their next stated meeting, 
or at such future meeting or time as they may designate, and shall 
be determined by a vote of the majority of a quorum, or of any other 
number not less than a quorum of the members present at such meet- 
ing, and the decision of the Committee shall be final and conclusive 
upon all parties, without exception or appeal. 

DEED OF TRUST 

THIS DEED OF TRUST, Made this First day of July, A. D. 1907, 
by and between EDWIN L. WARD, HENRY C. THOM, HORACE C. GARDNER, 
CHARLES O. YOUNG, FRANK S. HAYWARD, CHARLES A. PEACOCK, ROBERT 
C. McMANus, ARTHUR D. WHITE, JOHN M. CHAPLIN, GEORGE A. COLLOM, 
ROBERT L. BURNS, THOMAS J. MCAFFEE, RICHARD W. HOWES, HERBERT J. 
NELSON and DAVID H. GIFFORD, parties of the first part, and Louis F. 
SWIFT, EDWARD F. SWIFT, CHARLES H. SWIFT, D. EDWIN HARTWELL and 
EDWARD TILDEN, parties of the second part, all of the City of Chicago, 
County of Cook and State of Illinois, WITNESSETH : 

WHEREAS, The said parties of the first part are desirous of providing 
for themselves and such other persons who shall become beneficiaries 
under this Deed of Trust, benefits in case of sickness, accident or death, 
and for that purpose are desirous of providing for the safe-keeping and 
management of all funds that may be obtained or contributed for said 
purposes ; and, 

WHEREAS, The said parties of the first part have requested the said 
parties of the second part to act as first trustees of the said funds which 
shall accrue hereunder for the purposes aforesaid ; and, 

WHEREAS, The parties of the second part have agreed to act as first 
trustees under this agreement, as hereinafter provided, for the purposes 
aforesaid ; and, 

WHEREAS, It is desired by this Deed of Trust to definitely state the 
terms of this Trust and the plan of providing for such benefits in case of 
sickness, accident or death ; 

Now, THEREFORE, In consideration of the premises, it is agreed as 
follows : 

FIRST. The purpose of this Deed of Trust is to provide for the 
establishment of a voluntary association, which shall be known as Swift 
& Company Employees Benefit Association, and also to provide for the 
custody, management and investment of the funds of said Association, and 
for the payment out of said funds of definite amounts to such persons as 
contribute thereto, and who shall be known as "Members of the Benefit 
Association," when, under the Rules of the said Association, they are 
entitled to such payment, by reason of disability, and also in the event of 



APPENDICES 369 

the death of a member, for the payment of the amounts provided by the 
Rules of said Association to the person or persons designated by him, 
or the person legally entitled thereto. 

SECOND. The funds of this Association shall consist of contributions 
from members and from all other sources and interest paid thereon. 

THIRD. The general conduct of the business of said Association shall 
be under the direction of an Advisory Committee, which shall consist of 
fifteen (15) members, and after December 31, 1907, shall be made up as 
follows : 

The Treasurer of Swift & Company, a corporation organized under 
the laws of the State of Illinois, shall be ex-officio a member and Chairman 
of said Committee. 

The other members of the Advisory Committee shall be chosen annually, 
in November, to serve for one year from the first day of January, next 
succeeding, and until their successors shall be chosen and assume office. 

Seven of said members shall be chosen by the Board of Directors 
of said Swift & Company, and the remaining seven by the employees 
who are members of the Benefit Association from among themselves, from 
such plants as shall be designated, from time to time, by the Advisory 
Committee. 

FOURTH. The members of the Advisory Committee, chosen by the 
members of the Benefit Association, shall be elected by ballot, the vote 
being taken and certified by tellers of the different plants, designated by 
the Advisory Committee, and the polls shall be kept open for balloting 
during the business day at each plant. 

FIFTH. For the year ending December 3ist, 1907, the members of 
the Advisory Committee shall be as follows : 

Laurence A. Carton, Chairman ; Charles O. Young, Horace C. Gardner, 
Frank S. Hayward, George A. Collom, Henry C. Thorn, Robert C. Mc- 
Manus, Richard W. Howes and Frank Stout, all of the City of Chicago, 
State of Illinois ; Richard C. Annan, of the City of St. Joseph, State of 
Missouri ; James Frank Cecil, of the City of Kansas City, State of 
Missouri; William McKinley, of the City of East St. Louis, State of 
Illinois; Peter T. Powers, of the City of Omaha, State of Nebraska; 
George Heimel, of the City of St. Paul, State of Minnesota, and John 
Brennan, of the City of Ft. Worth, State of Texas. 

SIXTH. In the event of the termination of the service for Swift & 
Company, or of his membership in the Benefit Association, of any member 
of the Advisory Committee, his membership in the Advisory Committee 
shall thereupon cease. 

Any vacancy among the members of the Advisory Committee, elected 
by the contributing employees, shall be filled by the member of the same 
packing plant at which the retiring member was employed at the date of his 
election, who shall have received the next highest number of votes to 



370 INDUSTRIAL INSURANCE 

the retiring member, and in the event that no one shall be eligible as 
aforesaid to fill such vacancy, a member from the same packing plant 
shall be designed by the President of said Swift & Company. 

The President of said Swift & Company shall also fill any vacancy 
among the members of the Advisory Committee chosen by the Board of 
Directors of Swift & Company. 

Each member of the Advisory Committee shall serve until his suc- 
cessor is chosen and takes office. 

The Manager of the Association shall be Secretary of the Advisory 
Committee and shall have charge of its records. 

SEVENTH. The Advisory Committee shall have general supervision 
over the operations of the Association, and shall see that it is conducted 
in accordance with the provisions of this Deed of Trust, and the Rules 
and Regulations adopted by said Committee. 

A majority vote shall be necessary for the determination of the 
action of said Advisory Committee and it may make such rules and regu- 
lations, for the conduct of the business of the Association as it may see 
fit, not inconsistent with the provisions of this Deed of Trust. 

EIGHTH. The Advisory Committee shall hold stated meetings quart- 
erly at Chicago, on the second Thursday of January, April, July, and 
October, in each year, and shall meet at other times at the call of the 
Chairman thereof, and it shall be the duty of said Chairman to call 
a meeting at the written request of five members of the Advisory Com- 
mittee. 

NINTH. The Trustees of the Association shall appoint a Manager, 
who shall have charge of all business pertaining to the Association, and 
shall employ such clerks and other assistants as may be necessary, prescribe 
the forms and blanks to be used, certify all bills and pay-rolls, and furnish 
the Advisory Committee with such reports as they may require, decide all 
questions properly referred to him, and exercise such other authority as 
may be conferred on him by the Trustees or the Advisory Committee. 

TENTH. The said Trustees may also appoint an Assistant Manager, 
who shall exercise all of the authority of the Manager in his absence, 
and shall at all times perform such other duties as may be assigned to 
him by the Trustees, Advisory Committee or the Manager. 

ELEVENTH. The said Trustees shall also appoint a Medical Director, 
who shall, subject to the approval and control of the Manager, appoint 
Medical Examiners, assign them to locations, direct their work and have 
general supervision of the medical and surgical affairs of the Association. 
The Medical Director may, in the discretion of the said Trustees, be the 
same person as the Manager or Assistant Manager. 

TWELFTH. Medical Examiners shall make the required physical 
examination of applicants for membership in the Association, prepare 
applications, report the condition of sick or injured members, decide 



APPENDICES 371 

when members are disabled, and when they are ready for work, certify 
bills for surgical treatment, perform such other duties as may be required 
of them by the Medical Director, Manager or Advisory Committee, and 
conform to the Rules of the Association. 

THIRTEENTH. No Trustee under this Deed of Trust nor any member 
of the Advisory Committee shall ever receive any compensation for his 
services as such Trustee or as such member of the Advisory Committee. 
This Section is, however, subject to the provision of Section Four of the 
agreement, "Exhibit A," hereto attached. 

FOURTEENTH. In case of the death, resignation, permanent removal 
from Cook County, or inability to act as any of said Trustees, the Board 
of Directors of said Swift & Company shall choose a suitable person to 
fill the vacancy, and any substitute Trustee shall have the same power and 
authority and be subject to the same duties and liabilities as are provided 
in the case of the Trustees named in this Deed of Trust, and as if 
originally named as such herein, and the substitution of such Trustee shall 
be certified by the Chairman of the Advisory Committee of the Trust 
Company with which this Deed of Trust is deposited, and shall be effective 
from that time. 

FIFTEENTH. The Trustees of the Association shall have full power and 
authority over all funds belonging to it, and, without incurring any 
personal liability, they may and are hereby authorized and directed to 
enter into an agreement with said Swift & Company providing for the 
handling of all funds by said Swift and Company; it being understood that 
said Swift & Company shall, in consideration therefor, be obligated to 
pay interest at such rate as shall be determined by the Trustees hereunder 
with the approval of the Advisory Committee, and until otherwise fixed 
by them at the rate of five per cent, per annum on all monthly balances 
in its hands ; provide for the expenses of operating the Asosciation and 
guarantee the payment of all benefits, as provided by the Rules of said 
Association, a copy of which is hereto attached and marked "Exhibit B," 
and made part hereof, and of any amendments thereof, certified by the 
Chairman of the Advisory Committee to the Trust Company with which 
this Deed of Trust is deposited. 

No Trustee under this Deed of Trust shall be liable on account of any 
funds of the Association, except in case loss is due to his own fraudulent 
or wilful act or negligence. 

SIXTEENTH. This Trust shall continue for the life of the last survivor 
of the parties of the first part and twenty-one (21) years thereafter, unless 
sooner legally terminated. 

SEVENTEENTH. The fiscal year of the Association shall begin with the 
first day of January of each year, and at the close of each fiscal year the 
accounts of the Association shall be audited and the condition thereof 
reported by some competent person or persons selected for that purpose 



372 INDUSTRIAL INSURANCE 

by those members of the Advisory Committee chosen by the members of 
the Association. 

EIGHTEENTH. Amendments to the Rules of the Association may be 
proposed to the Advisory Committee at any quarterly meeting by any 
member thereof ; but such amendments shall not be acted upon until a 
subsequent meeting, and shall not be operative unless adopted by an 
affirmative vote of two-thirds of all members of the Committee and duly 
announced by the Manager, and any amendment so adopted, approved and 
announced shall be certified by the Chairman of the Advisory Committee 
and filed with the Trust Company with which this Deed of Trust is 
deposited, and shall be binding upon the members of the Benefit Associa- 
tion, and all persons claiming through or under them from the date 
specified in the announcement thereof. Until amended, as above provided, 
the Rules of said Association shall be as appear in "Exhibit B," hereto 
attached. 

NINETEENTH. The Advisory Committee shall determine the require- 
ments necessary for membership in the Association, and until otherwise 
provided by said Committee such membership shall be confined to employees 
of said Swift & Company ; and the said Advisory Committee may divide 
the members of the Association into classes for the purpose of determining 
contributions and benefits, and may also provide for the transfer of a 
member from one class to another, and may also fix the amount of -contri- 
butions required of members, the manner of collection thereof, and the 
amount of benefits to be paid, and make all other necessary provisions for 
the conduct of the business of the Association by the Manager and its 
other officers. 

TWENTIETH. The said parties of the second part acknowledge receipt 
of contributions by parties of the first part as follows : 

Edwin L. Ward $1.40 

Henry C. Thorn 1.40 

Horace C. Gardner 1.40 

Charles O. Young 1.40 

Frank S. Hayward 1.40 

Charles A. Peacock 1.40 

Robert C. McManus 1.40 

Arthur D. White 1.40 

John M. Chaplin 1.40 

George A. Collom 1.40 

Robert L. Burns 50 

Thomas J. McAffee 1.40 

Richard W. Howes 1.40 

Herbert J. Nelson 50 

David H. Gifford 45 

Said contributions, together with all other contributions and receipts of 



APPENDICES 373 

said Association, and the interest thereon and increment thereof, are or 
shall be deposited with said Swift & Company, in accordance with the 
provisions of the agreement hereinbefore authorized to be made by and 
between parties of the second part, and said Swift & Company. 

TWENTY-FIRST. In case, for any reason, it shall be found desirable 
to make any change in this Deed of Trust, or any addition, supplement or 
amendment thereto, same shall be made only after having been proposed 
at a previous quarterly meeting of the Advisory Committee, and upon the 
affirmative vote of two-thirds of all members of said Committee, and, after 
the same has been ratified by the Board of Directors of the said Swift 
& Company, shall be certified by the Chairman of the Advisory Committee 
to the Trust Company with which this Deed of Trust is deposited and 
thereafter shall be as effective as if originally part hereof. 

TWENTY-SECOND. In case, for any reason, it should be necessary to 
provide for the custody of any of the funds of the Association, other than 
with the said Swift & Company, then and in that event the said 
Trustees may deposit or invest the same in such safe and reliable manner 
and with such person or corporation or in such investment as they shall 
determine to be in the best interest of the Association, and their act in 
the premises shall be sufficient evidence of their authority, and it shall 
not be necessary for any person dealing with them to look beyond this Deed 
of Trust and the other papers relating to the Association deposited with 
the Trust Company holding this Deed of Trust. 

TWENTY-THIRD. It is the intention hereof, and this Deed of Trust 
is executed on the express understanding, that wherever the name Swift 
& Company occurs in this instrument it shall also be held to include the 
successor or successors and assign or assigns of said Swift & Company, 
and they shall be substituted for said Swift & Company, as occasion may 
require, with like force and effect, to all intents and purposes, as if 
expressly named herein, and the "Board of Directors" of said Swift & 
Company, wherever used herein, shall likewise be held to include the 
Board of Directors of the successor or successors and assign or assigns of 
said Swift & Company. 

IN WITNESS WHEREOF, The parties hereto have hereunto . set their 
hands and seals, the day and year first above written. 

EDWIN L. WARD [Seal.] 

HENRY C. THOM [Seal.] 

HORACE C. GARDNER [Seal.] 
CHARLES O. YOUNG [Seal.] 
FRANK S. HAY WARD [Seal.] 
CHARLES A. PEACOCK [Seal.] 
ROBERT C. MCMANUS [Seal.] 
ARTHUR D. WHITE [Seal.] 
JOHN M. CHAPLIN [Seal.] 



374 INDUSTRIAL INSURANCE 

GEORGE A. COLLOM [Seal. 

ROBERT L. BURNS [Seal. 

THOMAS J. MCAFFEE [Seal. 

^RICHARD W. HOWES, [Seal. 

HERBERT J. NELSON [Seal. 

DAVID H. GIFFORD [Seal. 

Louis F. SWIFT [Seal. 

EDWARD F. SWIFT [Seal. 

CHARLES H. SWIFT [Seal. 

D. EDWIN HARTWELL [Seal. 

EDWARD TILDEN. [Seal. 

AGREEMENT 

THIS AGREEMENT, Made and entered into by and between Louis F. 
SWIFT, EDWARD F. SWIFT, CHARLES H. SWIFT, D. EDWIN HARTWELL, and 
EDWARD TILDEN, as Trustees of Swift & Company Employees Benefit 
Association, under a Deed of Trust, dated July i, 1907, parties of the 
first part, and SWIFT & COMPANY, an Illinois corporation, party of the 
second part, WITNESSETH : 

WHEREAS, Under and by virtue of the said Deed of Trust, the said 
parties of the first part have been authorized to enter into an agreement 
with party of the second part, relating to the funds of said Association, 
a copy of which Deed of Trust is hereunto attached, marked "Exhibit A," 
and made part hereof, and, 

WHEREAS, The said party of the second part is interested in further- 
ing the purposes of the said Association, and is willing to accept the 
custody of its funds, as hereinafter provided, and pay interest thereon and 
provide for its expenses and guarantee payment of its benefits. 

Now, THEREFORE, In consideration of the premises, the said parties 
agree and bind themselves as follows : 

1. Said parties of the first part hereby authorize and request party of 
the second part to deduct from its pay-rolls out of wages due its employees 
who are members of said Association, the amounts, from time to time, due 
from said members for the purpose of making contributions required to 
be made by them under the Rules of said Association, and the amounts 
so collected shall be held by party of the second part under the provisions 
of this agreement. 

2. Party of the second part agrees to pay out of such funds all benefits 
required to be paid by said Association, upon order of the said Trustees or 
the Manager of said Association. 

3. Party of the second part also agrees to allow interest at such rate 
as shall be determined by the parties of the first part, with the approval 
of the Advisory Committee, and until otherwise fixed by them at the 
rate of five per cent, per annum on all monthly balances of said Associa- 
tion and also to provide for the operating expenses of said Association, 



APPENDICES 



375 



and hereby agrees to make good any deficiency in the funds of said 
Association to meet its obligations to members. 

4. Party of the second part agrees to continue the pay or wages or 
to reimburse all members of the Advisory Committee, for their time while 
engaged on business of the Association, or traveling to or from meetings 
of the Advisory Committee of the Association, and their expenses during 
such time shall be included in the operating expenses of the Association, 
which the party of the second part agrees herein to assume and pay. 

THIS AGREEMENT shall extend to and be binding upon the successors 
and assigns of the respective parties. 

WITNESS the hands of said parties of the first part and the said party 
of the second part, by its duly authorized President, attested by its Secre- 
tary and corporate seal, the first day of July, A. D. 1907. 

Louis F. SWIFT 
EDWARD F. SWIFT 

Seal of I CHARLES H. SWIFT 

Swift & Company \ D. EDWIN HARTWELL 

EDWARD TILDEN 
SWIFT & COMPANY 

Attest . By Louis F. SWIFT, President 

D. E. HARTWELL, Secretary. 

SWIFT & COMPANY EMPLOYEES BENEFIT ASSOCIATION 
SCHEDULE OF CONTRIBUTIONS FOR MEMBERS UNDER 45 YEARS OF AGE 
Members 45 years of age and over may enter on this schedule if they have been 
in the employ of Swift & Company continuously from December 3ist, 
1906, to date of entry and avail themselves of this privilege on or before 
December 31, 1907 













WJS 


**vj *n ^4 cd 






J 


1 


"3 


Sj^-I 






05 


| 





o 


~* 


w ^"S-S^ 


Weekly Pay of Employees 
Governing Highest 
Class They May Enter 


* 


rz . 
>* 


1-S 
H 


a 



*is? 
IK 


PI 1 ! 




1 


1 


11 


la 8 


in? 


Q O O 




fc 


* 


^ 


PQ 


H 


H 




i 


$0.15 


$3.00 


$ 200.00 


$ 400 . oo 


$ 800.00 




2 


. 20 


3.00 


400 . oo 


400.00 


800.00 


$13 . 50 and under 


3 


30 


4-5 


600.00 


600 . oo 


1,200.00 




4 


3 


6.00 


400.00 


400 . oo 


800.00 




5 


.40 


6.00 


800.00 


800.00 


1,600.00 


Over $13.50 and 














not over $18.00. . 


6 


5 


9.00 


800.00 


800 . oo 


1,600.00 


Over $18.00 and not 














over $30.00 


7 


75 


13.50 


1,200.00 


1,200.00 


2,400.00 


Over $30.00 


8 


I. 00 


18.00 


i, 600. oo 


1,600.00 


3,200.00 



376 INDUSTRIAL INSURANCE 

Additional death benefits (as allowed by rules), five cents per week for 
each $200. 

Members who have left the service and contribute for death benefit only, 
5 cents per week for each $200. 

Weekly accident benefit for 104 weeks and reasonable bill for surgical 
attention. 

Weekly sick benefit after the first six (6) working days for 52 weeks and 
half -weekly benefit for additional 52 weeks. 

SCHEDULE OF CONTRIBUTIONS FOR MEMBERS 45 YEARS OF AGE 

AND OVER AS FOLLOWS: 

Members joining between the ages of 45 and 50 years one and one-half 
times above contributions. 

Members joining between the ages of 50 and 55 years one and four- 
fifths times above contributions. 

Members joining between the ages of 55 and 60 years two and three 
tenths times above contributions. 



APPENDIX H 

EMPLOYEES' BENEFIT ASSOCIATION, INTERNATIONAL 
HARVESTER COMPANY 

OBJECT 

1. The object of the Benefit Association is to provide its members 
with a certain income when sick, or when disabled by accident, either 
on or off duty, and to pay to their families certain definite sums in 
case of death; to create and maintain a fund which shall belong to 
the employees, be used in payment of benefits to them, and cost them 
the least money possible considering the benefits received. 

ORGANIZATION 

2. International Harvester Company, International Harvester 
Company of America, and subsidiary companies, have associated 
themselves with such of their employees as may join the same in the 
formation of this Benefit Association. 

3. The Benefit Association is in the executive charge of a Board 
of Trustees consisting of members representing the plants and depart- 
ments of the International Harvester Company, the International 
Harvester Company of America, and subsidiary companies, and a 
Superintendent. 

The headquarters of the Superintendent will be at the general 
office of the Company in Chicago. 

4. In these regulations, unless otherwise qualified, the titles "Com- 
pany," "President," "General Manager" and "Board of Directors" will 
be understood as meaning the International Harvester Company, the 
President, General Manager, and the Board of Directors of that Com- 
pany. The titles, or terms, "Board of Trustees," "Superintendent," 
and "Medical Examiner," will be understood as meaning Board of 
Trustees, Superintendent, and Medical Examiner of the Employees' 
Benefit Association. The term "Fund" will be understood as apply- 
ing to the Employees' Benefit Association. 

5. The Benefit Fund will consist of contributions from members 
of the association, income or profit from investments, gifts or legacies 
to the Fund, and such contributions as may be made by the Company 
from time to time. 

377 



378 INDUSTRIAL INSURANCE 

COMPANY'S CONTRIBUTION 

6. At the end of each year, if the average membership in the 
Benefit Association during that year has equalled 50 per cent, of the 
average total number of employees in the companies' manufacturing 
plants, the company will contribute $25,000 to the fund, and if such 
average membership has equalled 75 per cent, of such total number 
of employees, the Company will contribute $50,000 to the fund. 
The Company agrees to temporarily advance funds when necessary 
for payment of benefits at due rate; to guarantee the safety of the 
fund and to pay semi-annual interest on the average balances at four 
per cent. 

HANDLING OF FUND 

7. The contributions from members shall be used only for the 
payment of benefits due to members of the Association, and the 
expenses of administration. If a surplus shall accumulate it shall 
remain under the control of the members of the Association, through 
their representatives on the Board of Trustees, and if a deficit arise 
the Company will make temporary advances to pay same. 

BOARD OF TRUSTEES 

8. There shall be a Board of Trustees of thirty members to be 
chosen annually in December, to serve for one year from the first 
day of January next succeeding, and until their successors shall take 
office, as follows : 

One half shall be chosen by the employees who are members of 
the Association; one representative to be chosen by employees from 
each Works, including the Works of subsidiary and affiliated com- 
panies and the field force of the Sales and Collection Departments of 
the International Harvester Company of America. 

An equal number shall be chosen by the Board of Directors of 
the Company. 

The President shall be ex officio a member and chairman of the 
Board of Trustees, and entitled to vote. He shall have the power to 
appoint a temporary chairman to serve in his absence. 

The number of Trustees may be increased or decreased after the 
first year by a majority vote of the Trustees, but at all times one-half 
shall be elected by the employees and one-half appointed by the 
Company. 

a) Quorum. A majority of the Board of Trustees shall consti- 
tute a quorum for the transaction of business. 



APPENDICES 379 

b) Election. The members of the Board of Trustees chosen by 
the members of the Benefit Association shall be elected by ballot, from 
the respective Works or Operating Departments, on the first Monday 
in December. Each member of the Benefit Association shall be 
entitled to cast one vote, and the votes shall be taken and certified 
under oath by tellers selected by the Trustees. 

c) Trustees for First Quarter. The first Board of Trustees to 
serve to January i, 1909, shall be appointed by the President or 
General Manager. 

d) Termination of Membership. In the event of termination of 
service of any member of the Board of Trustees, his membership in 
the Board shall thereupon terminate. 

e) Vacancies. Any vacancy among the members of the Board of 
Trustees elected by the employees shall be filled by special election at 
the same Works or Operating Department. 

Any vacancy among the members chosen by the Board of Direc- 
tors shall be filled by appointment of the President or General 
Manager. 

/) Secretary. The Superintendent of the Association shall be 
Secretary of the Board. He shall have no vote. 

g} Duties of Board of Trustees. The Board of Trustees shall 
appoint and have general supervision over the Superintendent, and of 
the operations of the Association, and see that they are conducted in 
accordance with its regulations. 

h) Meetings. The Trustees shall hold stated meetings, quarterly, 
on the second Thursdays of January, April, July, and October, at the 
general office of the Company, Chicago, and shall meet at other times 
at the call of the Chairman. 

i) Special Meetings. It shall be the duty of the Chairman to call 
special meetings of the Trustees upon the written request of seven of 
its members. 

/) Traveling Expenses. The necessary traveling expenses of 
Trustees, actually incurred, and pay or wages of such members for 
the time engaged in traveling to or from meetings of the Board and 
attending same, shall be paid by the Company. 

ANNUAL REPORTS 

9. The fiscal year of the Association shall begin with the first day 
of January of each year. 



380 INDUSTRIAL INSURANCE 

The first fiscal year shall be from September i, 1908, to January i, 
1910. 

The condition of the Fund at the close of each year shall be 
audited and reported on by a competent person or persons selected for 
that purpose by the Trustees elected by the members of the Association. 

A detailed report, including all receipts and disbursements, shall 
be printed annually, and members may procure copies on application. 

The books shall be open at all times to members. 

SUPERINTENDENT 

10. The Superintendent of the Benefit Association shall be appointed 
by the Trustees. 

Under the direction of the Board, he shall have charge of all 
business of the Association; employ necessary clerks and other assis- 
tants; prescribe the forms and blanks to be used; certify all bills and 
pay-rolls; sign all orders for payments of benefits, furnish to the 
Board such reports as they may require, and decide all questions 
properly referred to him. 

He shall have authority to appoint physicians, medical examiners, 
and visiting nurses, and shall have general supervision of all medical 
and surgical affairs of the Association. 

MEDICAL EXAMINERS 

11. The medical examiners shall make the required physical 
examination of applicants for membership in the Benefit Association, 
prepare applications, report the condition of sick or injured members, 
decide when members are disabled and when they are able to work, 
whether any disability shall be considered a relapse or original disa- 
bility and whether cause of disability shall be classed as due to sick- 
ness or accident, certify bills for surgical and hospital treatment, and 
perform such other duties as may be required of them by the Superin- 
tendent. The medical examiner and physician may be one and the 
same person. 

MEMBERSHIP 

12. All employees of the International Harvester Company, Inter- 
national Harvester Company of America, and subsidiary companies 
who apply for membership and conform to the regulations, shall be 
members of the Association. 

13. Eligibility. (a) Any employee in service on or before Sep- 



APPENDICES 381 

tember 20, 1908, may become a member of the Association without 
medical examination and without age limit at any time prior to 
January i, 1909. 

b) Thereafter, any employee not over forty-five years of age may, 
upon passing a satisfactory medical examination, and upon approval 
of his application by the Superintendent, became a member. 

c) Further, any employee who enters the service after September 
20, 1908, and is over forty-five years of age, may, upon passing a 
satisfactory medical examination, and upon approval of his applica- 
tion by the Superintendent, become a member under the same regula- 
tions, except that the death benefit in such case shall be only $100. 

14. Temporary Lay-off. Any member who is temporarily relieved 
from service for a period not exceeding ninety days may retain his 
membership during such absence by paying his contributions each 
month in advance, the amount of contributions during such absence to 
be based upon previous two months" average contributions. 

15. Leaving Service. When a member resigns from the service 
or leaves the service without notice, or absents himself without 
notice (unless he afterwards gives reasons satisfactory to the Super- 
intendent), or is discharged, or is laid off for a period longer than 
ninety days, his membership in the Association shall terminate with 
his employment, and he shall not thereafter be entitled to any bene- 
fits except for disability beginning and reported before such termina- 
tion of employment and continuing without interruption. 

Any employee leaving the service, who has been a member of the 
Benefit Association for one year, may continue his membership in 
respect only of the minimum death benefit which he has held during 
the last year of employment, or of any smaller amount, upon making 
supplementary application therefor before termination of employment 
or within five days thereafter. 

16. Reinstatements. Any member paying full contributions dur- 
ing temporary leave of absence may be reinstated within ninety days 
without physical examination. 

If any member contributing for death benefits only is re-employed, 
he shall resume full membership upon passing a satisfactory physical 
examination. 

APPLICATIONS 

17. Membership in the Benefit Association shall be based upon an 
application in the following form: 



382 INDUSTRIAL INSURANCE 

APPLICATION FOR MEMBERSHIP IN EMPLOYEES' BENEFIT 

ASSOCIATION OF INTERNATIONAL HARVESTER 

COMPANY 

No 

Dept. or 

Works 

To the Superintendent of Employees' Benefit Association of International 
Harvester Company : 

I , 

being years of age, and residing at No 

Street, in the City of, 

in the County of , and State of 

now employed by 

do hereby apply for membership in said Employees' Benefit Association, 
and agree to be bound by the regulations of said Association, a copy of 
which has been by me received, and by any other regulations of said 
Benefit Association hereafter adopted and in force during my membership. 

I also agree, request and direct that said Company, by its proper 
agents, and in the manner provided for in such rules, shall, during the 
continuance of my employment, apply as a voluntary contribution from 
any wages earned by me under said employment two (2) per cent, of my 
wages for the purpose of securing the benefits provided in the regulations 
for a member of said Association. 

Unless I shall hereafter otherwise designate in writing, with the 
approval of the Superintendent of the Benefit Association, death benefits 
shall be payable to my wife (husband), if I am married at the time of 
my death ; or, if I have no wife (husband) living, then to my children, 
collectively, each to be entitled to an equal share, including as entitled 
to the parent's share the children of any dead child ; or if there be no 

children or children's children living, then to 

if living, and if not living, to my father and mother jointly, or the survivor; 
or if neither be living, then to my next of kin, payment in behalf of such 
next of kin to be made to my legal representative ; or, if there be no such 
next kin, or if proper claim is not made to the Superintendent within one 
year from the date of my death, the death benefit shall lapse, and the 
amount thereof shall become and remain a part of the Benefit Fund. 

I also agree, for myself and those claiming through me, to be gov- 
erned by the regulations providing for final and conclusive settlement of 
all claims for benefits or controversies of whatever nature, by reference 
to the Superintendent of the Benefit Association, and an appeal from his 
decision to the Board of Trustees. 

I also agree that any untrue or fraudulent statement made by me to 



APPENDICES 383 

the Medical Examiner, or any concealment of facts in this application, or 
any attempt on my part to defraud or impose upon said Benefit Associa- 
tion, or my resigning from or leaving the service of said International 
Harvester Company, International Harvester Company of America, or 
subsidiary company, or my being relieved or discharged therefrom, shall 
forfeit my membership in the said Benefit Association, and all rights, bene- 
fits and equities arising therefrom, except that such termination of my 
employment shall not (in the absence of any of the other foregoing causes 
of forfeiture) deprive me of any benefits to the payment of which I may 
be entitled by reason of disability beginning and reported before and con- 
tinuing without interruption to and after such termination of my employ- 
ment, nor of the right to continue my membership in respect of death 
benefit only, as provided in said rules. 

I certify that I am correct and temperate in my habits ; that, so far 
as I know, I am now in good health, and have no injury or disease, consti- 
tutional or otherwise, except as shown in the accompanying statement made 
by me to the Medical Examiner, which statement shall constitute a part 
of this application. 

In witness whereof I have signed my name hereto at 

, in the County of , 

State of , this day of 

A. D. 190. .; this application to take effect on such date as may be designated 
by said Superintendent. 

Signature of Applicant. 
Witness : 

The foregoing application is approved at the office of the Superin- 
tendent of the Employees' Benefit Association, International Harvester Co., 

at Chicago, Illinois, this day of 

A. D. 190. .; to take effect the day of 

A. D. 190. . 

Superintendent of Employees' Benefit Association. 

Applications shall take effect on the date when approved by the 
Superintendent, and a Certificate of Membership shall be issued. 

NOTE. For employees who are not required to pass a medical 
examination upon application, part of clause A and part of clause B 
referring to medical examination will be waived. 

18. Physical Defects. If any applicant for membership has physi- 
cal defects which would prevent the approval of his application if 
presented unconditionally, his application may nevertheless be 
approved; provided that he executes an agreement in writing, satis- 
actory to the Superintendent, to the effect that he shall not be entitled 



384 INDUSTRIAL INSURANCE 

under his membership to any benefits for disability caused by, arising 
from, or growing out of such defects; such agreement to be attached 
to and to be made a part of his said application, and such modification 
of the prescribed forms of application is hereby authorized. 

CONTRIBUTIONS 

19. The word "Contribution" wherever used in these rules shall 
be held and construed to mean such designated portion of the wages 
payable by the Company to an employee as he shall have agreed in 
his application that the Company shall apply for the purpose of secur- 
ing to him the benefits of the Benefit Association, or such cash pay- 
ments as it may be necessary for a member to make for said purpose. 

20. Contributions from Wages Due Dates. Contributions for any 
month will be due on the 1st and the I5th of that month, and will 
ordinarily be deducted from the member's wages due on these dates, or 
on regular pay-days at each Works. 

The contributions shall be 2 per cent, of the wages received by 
the employee. 

If any member's contribution is omitted from the pay-roll in 
error, the fact that such deduction has not been made shall not debar 
him or his beneficiary from benefits to which they would otherwise be 
entitled, and contribution shall be deducted from next pay-roll. 

21. Cash Payment of Contributions. When a member has no 
wages on the pay-roll, any contributions due from him must be paid 
in cash, in advance, to the Superintendent, otherwise he will be in 
arrears. 

A member contributing for death benefits only shall make such 
cash payments direct to the Superintendent. 

22. Amount of Contribution for Death Benefit Only. Members 
who have left the service of the Company and retain their member- 
ship for death benefits as herein provided, shall contribute ten cents 
per month, in advance, for each one hundred dollars of death benefit, 
on the basis of last year's salary, but not more than $2,000. 

23. Contributions During Disability. Members shall not make 
contributions for any time when declared disabled by the Medical 
Examiner, except as provided in the regulations. When full wages 
are paid the usual contribution shall be made. 

24. Arrears. When a member is in arrears he shall be entitled to 
no benefits, and if in arrears two months his right to reinstatement 
without physical examination shall cease without notice. 

25. Maximum Benefits. -No member shall be allowed to con- 



APPENDICES 385 

tribute or receive benefits on the basis of more than $2,000 annual 
compensation, but if his salary exceeds said amount, his contribu- 
tions and benefits shall be calculated on said sum. 

BENEFITS 

26. The following benefits shall be paid to members or bene- 
ficiaries entitled thereto, in accordance with the provisions of the 
regulations : 

27. Sickness Benefit. (a) Payment for each day, except for the 
first seven days of disability classed as due to sickness, for a period 
not longer than fifty-two weeks, at one-half of member's average 
wage, on basis of last sixty days. A relapse shall be considered part 
of the disability in computing term of disability. 

b) Establishing Claims for Sickness Benefit. To establish a 
claim for sickness benefits there must be positive evidence of acute 
or constitutional disease sufficient to cause disability. 

c} Causes of Disability which Shall Be Classed as Due to Sickness. 
Disability resulting from infection of a cut, abrasion, scratch, 
puncture, or other wound, or from any injury, not immediately dis- 
abling, and not reported at the time of the occurrence of the acci- 
dent causing the injury, or from poison, however taken into or acting 
upon the body, or from any overdose of medicine or drug taken by 
mistake, or from surgical operation necessary for the removal of 
some defect which would otherwise probably produce disability, or 
from sunstroke, or frostbite, shall be classed as due to sickness. 

28. Accident Benefits. (a) Payment for each day or part of day 
of disability classed as due to accident (either when at work or off 
duty), for a period of not longer than fifty-two weeks, at one-half 
of member's average pay, on basis of last sixty days' wages. 

b) Establishing Claims for Accident Benefits. To establish a 
claim for accident benefits the accident must be reported immediately 
upon its occurrence, and there must be external, positive and visible 
evidence of physical injury by accident sufficient to cause immediate 
disability. In cases of alleged sprain, strain, wrench, and the like, 
where physical proof of disabling injury is lacking, the member must 
furnish substantial history, satisfactory to the Superintendent, of vio- 
lence accidentally inflicted sufficient and liable to cause disabling 
injury, otherwise accident benefits will not be allowed. 

29. Benefits after Termination of Service. A member entited to 
benefits for time after termination of service shall not be entitled to 
benefits on account of sickness beginning or injury occurring during 



386 INDUSTRIAL INSURANCE 

A 
such time, nor on account of death occurring in such time, unless 

directly due to the sickness and injury and occurring during the dis- 
ability existing at the time of such termination of service, or unless 
he continues his membership in respect to death benefit only, in 
accordance with the foregoing. 

SPECIAL BENEFITS IN CASE OF SERIOUS ACCIDENT 

30. Feet and Hands. If a member receives accidental injuries 
producing the immediate severing of, or necessitating, in the opinion 
of a Medical Examiner of the Association, the amputation of a hand 
or foot at or above the wrist or ankle, he shall receive a total amount 
equal to one year's average wages. 

In case of loss of both hands or both feet, or of one hand and 
one foot, he shall receive twice the above benefits, or a total amount 
equivalent to two years' average "wages. 

31. Eyes. If a member receives accidental injuries resulting in 
the total and irrecoverable loss of sight of one eye, he shall receive 
a total amount equal to one-half his average yearly wage. 

For the total and irrecoverable loss of the sight of both eyes, he 
shall receive the total amount of two years' average wages. 

32. Lump Settlements. In case of any grave injury or chronic 
sickness where the member desires to accept a lump sum in lieu of 
the benefits which might become due to him or on his account, and 
in full of all obligations of the Benefit Association arising from his 
membership, the Superintendent shall have authority to make full and 
final settlement with such member on such terms as may be agreed 
upon in writing. All such settlements shall be reported to the Trustees 
at its next meeting. 

33. Limitations. No member shall be entitled to disability benefits 
from the Association and a pension from the Company at the same 
time, but he may retain his membership for death benefit without 
regard to pension. 

No member shall be entitled to receive benefits from sickness and 
accident disability at the same time. 

34. Relapse. In case of relapse in sickness disability occurring 
within two weeks, or a succession of sickness disability upon an acci- 
dent, which lasted one week or more, the first seven days shall not be 
deducted in computing time of sick benefits ; and where such immedi- 
ately preceding accident disability lasted six days or less, the num- 
ber of days to be deducted shall be seven, less the number of days of 
such accident disability. 



APPENDICES 387 

35. Payments. Benefits on account of continued disability will be 
paid semi-monthly. 

Benefits for short periods of disability will be paid as soon as the 
amount due can be determined. 

Benefits shall be paid only to the disabled member, or in accord- 
ance with his written order when approved by the Superintendent, or 
to his legal representative. 

Benefits shall be paid in conformity with the financial methods of 
the Company on orders drawn by the Superintendent, upon his receiv- 
ing such documents respecting claims as may be required by him. 

DEATH BENEFITS 

36. Death from Sickness. Payment, in case of death classed as 
due to sickness, of an amount equal to one year's average wages. 

37. Death from Accident. Payment, in case of death classed as 
due to accident, of an amount equivalent to two years' average wages. 

38. Establishing Claims for Death Benefits. Claims for death 
benefits must be made within sixty days after the death of the mem- 
ber. To establish a claim for accident death benefit there must be 
external, positive, and visible evidence of physical injury by accident 
sufficient to cause death; death due to other causes shall be classed 
as due to sickness. 

39. Payment of Death Benefits. Death benefits, together with any 
unpaid disability benefit, shall be payable to the beneficiary of a 
deceased member upon proof of claim. 

A part of the death benefit (not to exceed one hundred dollars) 
may, at the discretion of the Superintendent, be paid before final 
settlement, to meet funeral or other urgent expenses incident to the 
death of a member. 

40. Suicide. If a member commits suicide before the end of the 
first year of his membership the beneficiary shall receive in full satis- 
faction of all claims only such amount as the member has contributed 
for death benefits. 

DISABILITY 

41. Wherever the word "Disability" is used in these regulations, 
it shall be held to mean physical inability to work, by reason of sick- 
ness or accidental injury, and the word "Disabled" shall apply to mem- 
bers thus physicaly unable to work. 

42. The Decision as to when members are disabled and when they 
are able to work shall rest with the Medical Examiner of the Asso- 



388 INDUSTRIAL INSURANCE 

ciation, and his decision shall be final and binding upon the member, 
subject to the provisions of the regulations. 

43. Notification. When a Works member becomes disabled, he 
shall notify his timekeeper immediately or cause him to be notified; 
other employees shall notify their superior officers. In reporting dis- 
ability, the member shall give his house address. If he fails to give 
notice until he recovers, he shall not be entitled to benefits unless he 
proves his disability to the satisfaction of the Superintendent and 
gives satisfactory reason for failure to give notice. If he gives notice 
during disability, but delays in so doing, he shall not be considered 
disabled before the day on which notice is given, unless he proves 
his disability before that day to the satisfaction of the Superintend- 
ent and gives satisfactory reason for delay in giving notice. 

If a member becomes disabled when away from home, whether on 
business for his employer or on leave of absence, he shall not be 
entitled to benefits unless he reports his disability immediately and 
proves it to the satisfaction of the Superintendent. 

44. Reports. When a member becomes disabled, he shall also, 
unless unable on account of his disability, report immediately to the 
Medical Examiner, at his office, during business hours. A disabled 
member not confined to the house by his disability shall also report 
at the Medical Examiner's office from time to time as requested, and 
keep any other appointments made by the Examiner. Members who 
avoid the Medical Examiner or neglect to report or keep appointments 
shall not be entitled to benefits. 

If a member who has been reported as able to work by the 
Medical Examiner is not able to work on the day set, he shall immedi- 
ately notify his timekeeper, and the Medical Examiner, and report to 
the latter in person if possible; otherwise he shall not be considered 
disabled after the day set for his return to work. 

45. Absence. When a disabled member wishes to leave home, he 
shall obtain from the Medical Examiner written approval of absence 
for a specific time, shall furnish him satisfactory proof of disability, 
while absent, and report immediately to him on his return, otherwise 
he shall not receive benefits while absent. 

46. No Benefits When Disability Is Due to Intoxication, etc. 
Benefits shall not be payable for disability directly, indirectly or 
partly due to intoxication, or the use of alcoholic liquors as a bever- 
age, or to immoderate use of stimulants or narcotics, or to unlawful 
acts or immoralities, or to venereal diseases, however contracted, or 



APPENDICES 389 

to the results thereof, or to urethritis, orchitis, epididymitis, stricture, 
or glandular swelling or abscess in the groin, however caused, or to 
fighting, unless in self-defense against unprovoked assault, ot to other 
encounter, such as wrestling, scuffling, fooling, and the like, or to 
injury received in any brawl, or in any liquor saloon, gambling house 
or other disreputable resort. 

During any such disability coming under this rule a member may 
contribute for and be entitled to DEATH BENEFITS ONLY. 

EXAMINATION 

47. Members shall not be entitled to benefits if they decline to 
permit the Medical Examiner to make or have made by any other 
physician such examination as he may deem necessary to ascertain 
their condition when claiming disability. 

Disabled members must take proper care of themselves and have 
proper treatment. Benefits will be discontinued to members who 
refuse or neglect to follow the recommendations of the Medical 
Examiner. 

CONTROVERSY 

48. Evidence. In any controversy, claim, demand, suit-at-law, or 
other proceeding between any member, his beneficiary or legal repre- 
sentative, and the Benefit Association, the certificate of the Superin- 
tendent as to any facts appearing in the records of the Benefit Asso- 
ciation, or of International Harvester Company, International Har- 
vester Company of America, or subsidiary company, or that any writ- 
ing is a copy taken from said records, or of any instrument on file in 
said Benefit Association, or with International Harvester Company, 
International Harvester Company of America, or subsidiary company, 
or that any action has or has not been taken by the Board of Trus- 
tees, or the Board of Directors, shall be prima-facie evidence of the 
facts therein certified. 

49. Appeal. All questions or controversies of whatsoever char- 
acter, arising in any manner, or between any parties or persons, in 
connection with the Benefit Association or the operation thereof, 
whether as to any claim for benefits preferred by any member or his 
legal representative or his beneficiary, or any other person, or whether 
as to the construction of language or meaning of the rules, or as to 
any writing, decision, instruction or acts in connection with the 
operation of the Benefit Association, shall be submitted within sixty 
(60) days of the time of the decision from which an appeal is taken, 



3QO INDUSTRIAL INSURANCE 

to the Superintendent, whose decision shall be final and conclusive, 
unless an appeal in writing from such decision shall be taken to the 
Board of Trustees within thirty (30) days after notice of such decision 
to the parties interested. 

50. Hearing. When an appeal is taken to the Board of Trustees 
it shall be heard by the Trustees without further notice, at their next 
stated meeting, or at such future meeting or time as they may desig- 
nate, and shall be determined by a vote of the majority of the mem- 
bers present at such meeting, and the decision of the Trustees shall 
be final and conclusive upon all parties, without exception or appeal. 

AMENDMENTS 

51. Amendments to the regulations of the Benefit Association may 
be proposed to the Trustees at any quarterly meeting by any member 
of the Board. Amendments so proposed may be acted upon only at 
a subsequent meeting, except by unanimous consent. 

No amendment shall be operative unless adopted by the affirmative 
vote of two-thirds of all the Trustees. 

Any amendment so adopted shall be binding upon the Company 
and the members of the Benefit Association and all persons claiming 
through them, from the date specified in the announcement thereof. 

PENSION SYSTEM OF INTERNATIONAL HARVESTER 
COMPANY AND SUBSIDIARY COMPANIES 

The Board of Directors, after careful consideration of the sub- 
ject and an examination of the various pension systems now in 
operation, have approved the following plan as the best and most 
liberal for employees who by long and faithful service have earned an 
honorable retirement. 

The Directors establish this Pension Fund as an evidence of their 
appreciation of the fidelity, efficiency, and loyalty of the employees. 

In the administration of this pension system are associated Inter- 
national Harvester Company, International Harvester Company of 
America, and subsidiary companies. 

PENSION BOARD 

I. Administration. The administration of the pension fund shall 
be in charge of a Pension Board consisting of five members who 
shall all be officers or employees of this Company or of affiliated or 
subsidiary companies, and shall be appointed annually by the Board of 
Directors of this Company, to serve for one year and until their 
successors are appointed and shall qualify. 



APPENDICES 391 

2. Officers. The Pension Board shall elect a Chairman and a 
Secretary from among its members, and the Treasurer of this Com- 
pany shall be ex-officio Treasurer of the Fund. The Board may make 
and enforce rules for the efficient administration of the pension fund, 
subject to the approval of the Board of Directors. The Pension 
Board shall control the payment of pension allowances under the 
rules hereinafter stated. 

3. Quorum. A majority of the Pension Board shall constitute a 
quorum for all purposes. 

4. Representation. The members of the Board shall be so chosen 
that the principal departments of the business shall have representa- 
tion. 

PENSION FUND 

5. The Treasurer of the Company shall be the custodian and 
Treasurer of the fund, and additions shall be made to said fund 
yearly or from time to time according to the aggregate pension 
allowances and the amount available in the pension fund for pay- 
ment of the same. Should the aggregate pension allowances exceed 
$100,000 in any one year, then unless the Board of Directors increases 
the yearly amount usable for pensions, a new rate shall be established 
proportionately reducing all allowances. 

Payments from this fund shall only be made in accordance with 
and by direction of the Pension Board. 

ELIGIBILITY 

6. The Pension Board may authorize the payment of a pension to 
any retired employee on the following basis : 

a) All employees of this Company and of subsidiary and affiliated 
companies, engaged in any capacity, are eligible to pensions as herein- 
after stated. 

b) All male employees who shall have reached the age of sixty- 
five years, and have been twenty or more years in the service, may, 
at their own request, or at the discretion of the Pension Board, be 
retired from active service and become eligible to a pension. 

c} All male employees who have been twenty or more years in 
the service shall be retired at the age of seventy years on the first day 
of the calendar month following that in which they shall have attained 
said age, unless at the discretion of the Pension Board some later 
date be fixed for such retirement. Persons occupying executive 
positions are exempt from maximum age limit. 



392 INDUSTRIAL INSURANCE 

d) All female employees who shall have reached the age of fifty 
years and have been twenty or more years in the service, may at their 
own request, or at the discretion of the Pension Board, be retired 
from active service and become eligible to a pension. 

e) All female employees shall be retired at the age of sixty years, 
on the first day of the calendar month following that in which they 
shall have attained the age, unless at the discretion of the Pension 
Board, a later date be fixed for such retirement. Persons occupying 
executive positions are exempt from maximum age limit. 

DEFINITIONS 

7. The terms "service" and "in the "service" apply to all employees 
of the International Harvester Company, or of any affiliated or sub- 
sidiary companies which are now or may hereafter be owned or con- 
trolled by it, and of the International Harvester Company of America, 
who have received a stated and regular compensation from any of 
said companies. The term of service shall be reckoned from the date 
of commencing with the original company whose property and busi- 
ness shall have become those of the International Harvester Com- 
pany, or any subsidiary companies, or of the International Harvester 
Company of America. 

8. Temporary Absence. A temporary lay-off on account of illness 
or of' reduction of force is not to be considered as a break in the con- 
tinuity of service, but when such absence exceeds six consecutive 
months it shall be deducted in computing the length of active service. 

g. Leaving Service. If a person, after leaving the service for 
more than two years, shall be re-employed, he shall be considered in 
his relation to the pension system as a new employee. 

PENSION ALLOWANCES AND CONDITIONS 

10. Amount. The sums which the Board of Pensions may author- 
ize to be paid monthly to employees retired at the age limit shall be 
as follows : For each year of active service an allowance of one per 
cent, of the average annual pay during the ten years next preceding 
retirement ; but no pension shall exceed $100 per month, or be less 
than 18 per month. 

11. Payment. (a) Pension allowances shall be paid on the first 
of each month from the date of retirement until the death of employee. 

b) At the discretion of the Pension Board these allowances may 
be continued to widows and orphans of a pensioner for a limited 
period. 



APPENDICES 393 

c) Pension allowances shall be non-assignable, and an attempted 
transfer or pledge of the same shall not be recognized by the Pension 
Board and may in its discretion work a forfeiture thereof. 

d) Pension allowances may be suspended or terminated by the 
Pension Board in cases of gross misconduct, or of any violation of 
the Rules, or, at its discretion, may be paid to some member of the 
family. 

e) The acceptance of the pension shall not debar any retired 
employee from engaging in any other business which in the judgment 
of the Pension Board is not prejudicial to the interests of this Com- 
pany or of any affiliated or subsidiary company, but he cannot re-enter 
service. 

/) No payments for pensions shall be approved by the Pension 
Board until payments from any relief fund operated by this Company, 
or any affiliated or subsidiary company, shall cease. 

PENSIONS HOW COMPUTED 

12. The amount of pensions granted on account of advanced age 
will depend, as before stated, on two conditions: the number of years 
the person has served the Company, and the amount of his average 
wages per year for the ten years next preceding retirement. Thus, 
for illustration, if the average pay per year for the last ten years of 
active service equals $600, and if the service has been continuous for 
twenty-five years, the pension would be 25 per cent, of $600, or $150 
per year, or $12.50 per month. Since the minimum pension has been 
fixed at $18 per month, then to this regular percentage $5.50 would 
be added, making the minimum sum of $18. 

In special cases where the term of service is less than twenty 
years, the pension and the amount of same, if any, will be deter- 
mined solely at the discretion of the Board of Pensions. 

Department Heads are expected to keep informed of the where- 
abouts and physical condition of former employees receiving pen- 
sions, and are required to advise the Secretary of the Board of 
Pensions of the- death of the pensioner, and of any other circumstances 
which would affect his monthly payment. 

A physical examination by a Company surgeon, or in case of 
female employees, by a surgeon approved by the Board of Pensions, 
will be required of employees who wish to be retired on a pension 
allowance because of incapacity. 



394 INDUSTRIAL INSURANCE 

HOW TO SECURE A PENSION 

13. An employee wishing to apply for a pension should first take 
up the subject with the Superintendent at the Works where he is 
employed, or the head of the department in which he is serving, or 
with a member of the Pension Board. A form will then be furnished, 
which must be filled out and signed, giving the necessary information 
concerning the applicant's age, length of service and wages. This 
formal application must be signed by the Works Superintendent, or 
head of department employing applicant, and then sent to the Secre- 
tary of the Pension Board at his office. 

NO CONTRACTURAL RIGHTS CONFERRED 

14. Neither the establishment of this system nor the granting of 
a pension, nor any other action now or hereafter taken by the Pen- 
sion Board, or by the .Officers of this Company, shall be held or con- 
strued as creating a contract, or giving to any officer, agent or 
employee a right to be retained in the service, or any right to any 
pension allowance and the Company expressly reserves, unaffected 
hereby, its right to discharge without liability, other than for salary or 
wages due and unpaid, any employee, whenever the interests of the 
Company may in its judgment so require. 



APPENDIX J 

MODEL CONSTITUTION AND BY-LAWS FOR MUTUAL 
BENEFIT ASSOCIATIONS 

CONSTITUTION 1 
ARTICLE I 

SECTION i. This association shall be known as the Mutual 

Benefit Association. 

, ARTICLE II 

SECTION i. The object of this association shall be the relief of 
its members in case of sickness, injury or disability which may unfit 
them for their daily labor and the provision of funeral benefits in case 
of death. 

ARTICLE III 

SECTION i. The regular meetings of this association shall be held 
semi-annually on the second Tuesday in June and December. Notice 
shall be posted in some prominent place in the works of the company 
at least three days before the meeting. 

SEC. 2. Fifteen members shall constitute a quorum for the trans- 
action of business. 

ARTICLE IV 

SECTION i. The officers of this association shall be a President, a 
Vice-President, a Secretary, a Treasurer, and a Board of Directors 
consisting of the President, Vice-President, Secretary, and six elected 
members, a majority constituting a quorum for the transaction of 
business. 

SEC. 2. The President, Vice-President, Secretary, and Treasurer 
shall be elected to serve one year. The first year that this goes into 
effect three Directors shall be elected to. serve one year and three 
to serve two years, and thereafter three Directors shall be elected each 
year to serve for two years. All officers shall hold office until their 
successors shall have been elected and qualified. 

SEC. 3. All officers shall be exempt from dues and assessments 
during their term of office. 

1 The figures used are for an association with a membership of one 
hundred. The form is from the Cleveland Chamber of Commerce. 

395 



396 INDUSTRIAL INSURANCE 

BY-LAWS 
ARTICLE I 

SECTION i. The President shall preside at all meetings, call special 
meetings at the request of a majority of the Board of Directors, or 
at the wi'itten request of seven members of the association. Notice 
of special meetings must be posted before 7:30 A.M. of the day of 
the meeting. The President shall sign all orders on the Treasurer for 
money. He shall, on the second Tuesday in December and June, 
appoint an auditing committee, consisting of three members of the 
association, whose duty it shall be to audit the books of the Secretary 
and Treasurer and make its report at the next regular meeting of the 
Board of Directors. The President shall enforce all rules of the 
association and perform such other duties as may be required. 

SEC. 2. The Vice-President shall perform the duties of the Presi- 
dent in the absence of the latter. 

SEC. 3. The Secretary shall keep and preserve all records, receive 
and deliver to the Treasurer all moneys due the association, take a 
receipt therefor, give each member a receipt for dues paid, issue 
notices of meetings and perform such other duties as the office may 
require. 

He shall give a bond of $100. He shall receive for his services 
a salary of $25 per year. At the expiration of his term of office he 
shall deliver to his successor books, papers, and other property which 
belong to the association. 

SEC. 4. The Treasurer shall receive and deposit in some banking 
institution, to be selected by the Board of Directors, all moneys 
belonging to the association and shall pay it out by check on orders 
signed by the President, Secretary, and one Director, and all checks 
must be signed by the Treasurer and countersigned by the President. 
He shall give a bond of $ , said bond to be furnished by a surety 
company, the expenses of procuring the same to be borne by the asso- 
ciation. (See note to Art. Ill, sec. 2.) He shall receive for his ser- 
vices a salary of $10 per year. 

SEC. 5. An investigating committee, consisting of three members, 
shall be appointed quarterly by the President and shall serve three 
months. Its duty shall be to visit the sick within forty-eight hours 
from the time of being notified by the Secretary and at least once a 
week thereafter, and report his or her condition to the Secretary in 
writing. 

SEC. 6. The Board of Directors shall have general supervision of 



APPENDICES 397 

the affairs of the association, and shall meet regularly once each 
month. It shall decide who are entitled to benefits. The board shall 
also have the power to cause the expulsion of a member from the 
association, the above action to require a two-thirds vote of those 
present. 

SEC. 7. The Board of Directors shall have power at such times 
as in its judgment is just and necessary, to levy an assessment on the 
members of the association to meet the contingencies of excessive 
sickness or accident ; provided, however, that such assessment shall 
not exceed fifty cents for first-class and twenty-five cents for second- 
class members, and that such assessment shall be levied not more than 
twice in one year. Further assessments may be levied by a two-thirds 
vote of the. members present at a regular or special meeting. 

SEC. 8. When an officer of this association shall leave the employ 
of the company said office shall be declared vacant and such vacancy 
shall be filled by the Board of Directors. 

ARTICLE II 

SECTION i. Any person, after being in the employ of for 

thirty days, and in good health, shall be eligible to membership in the 
association upon application to the Secretary and the payment of 
twenty-five cents for admission. All applicants, however, shall be 
subject to the approval of the Board of Directors; this approval shall 
constitute election to membership. 

SEC. 2. Membership shall cease upon the resignation, suspension 
or expulsion of a member; upon his ceasing to be in the employ of 

or upon his neglecting to pay his dues; and it shall be the 

duty of the Board of Directors to cause the names of persons coming 
within any of the above classes to be erased from the roll of mem- 
bership. Temporary suspension from work shall not be considered as 
ceasing to be in the employ of the company. 

SEC. 3. Anyone, after leaving the association, but remaining in the 
employ of the company, may become a member again by complying 
with the requirements of Art. II, sec. I, and by paying all back dues 
and assessments from the time he left the association. 

ARTICLE III 

SECTION I. The funds of the association shall consist of the 
admission fees, assessments, weekly or monthly dues of members, and 
any special gift to the association. 

SEC. 2. When the amount of money in the treasury shall have 



398 



INDUSTRIAL INSURANCE 



reached $750 there shall be no further collections, except in the case 
of new members, until the amount has been reduced to $400, after 
which the regular dues shall be collected until the amount in the 
fund shall again have reached $7S0. 2 

ARTICLE IV 

SECTION i. The membership shall be divided into two classes : 
the first class to consist of those whose regular weekly pay is $7.50 
or more, and the second class of those whose weekly pay is less 
than $7.50. 

SEC. 2. The dues in the first class shall be 10 cents per week (or 
50 cents per month), and in the second class 5 cents per week (or 25 
cents per month), to be paid to the Secretary in advance. 3 

SEC. 3. All money received shall be placed in one general fund. 

ARTICLE v 

SECTION I. Any member of the association unable to attend to 
his or her duties through sickness or disability must notify the Secre- 
tary at once of the date of such sickness or disability and shall be 
entitled to receive from the association out of the funds then on 
hand, if a member of the first class, one dollar per day, and if of the 
second class, fifty cents per day, Sundays excepted, for a period of 
not more than thirteen weeks. 

SEC. 2. When any member is entitled to benefits, the Secretary 
shall issue an order on the Treasurer countersigned by the President 
and one Director, and such benefits shall be paid weekly in such 
amounts as the By-laws provide. 

SEC. 3. No benefit to be paid to a member for the first week of 
sickness, except when the duration of sickness extends to two weeks 

2 For associations of different numbers of members : 



. Members 


Minimum 
Amount 


Maximum 
Amount 


Amount of Bond 
of Treasurer 


so 

IOO 

200 
300 
500 

IOOO 


$ 3o 
400 
500 
500 
75 
1,000 


$ 5 
75 
1,000 
1 ,200 
1.75 
3,000 


$ 500 

750 
1,000 

1,200 

1,75 
3,000 



3 In some cases it is found advisable that the paymaster of the com- 
pany be authorized to deduct the amount of each individual's regular pay 
on pay days and to turn the amount over to the Treasurer of the associa- 
tion. 



APPENDICES 399 

or more; then benefits shall be paid for the full term of sickness, 
including fractional parts of a week. 

SEC. 4. Any member failing to notify the Secretary within one 
week from date of commencement of sickness or disability shall be 
considered to be on the sick list only from date on which notice is 
given. 

SEC. 5. No member shall be entitled to benefits until he or she 
has been a member of the association for four weeks. No member 
who is in arrears for dues shall receive benefits. 

SEC. 6. Any member in arrears for dues for four weeks shall be 
considered dropped, and his or her name shall be taken off the list 
of members. 

SEC. 7. Any member having drawn benefits for the full term of 
thirteen weeks shall not be entitled to further benefits until he or she 
shall have been at work for a period of not less than four weeks, 
and no one shall draw, during one year, benefits for more than eigh- 
teen weeks' disability, unless by special action of the Board of 
Directors. 

SEC. 8. If any member entitled to benefits and having drawn the 
same and returned to work, is again taken sick within a period of 
four weeks, such second sickness shall be considered as a continua- 
tion of the first sickness, and the member shall be entitled to benefits 
for such a number of days, only, as added to the previous term of 
sickness, shall make thirteen weeks. 

SEC. 9. The Board of Directors shall have the right in all cases 
to require the certificate of a physician in good standing in regard to 
the sickness or disability of a member. 

SEC. 10. No benefits shall be paid for any sickness, injury or 
disability arising from intemperance or from any immoral or unlaw- 
ful act on the part of any member. 

SEC. ii. Upon the death of a member in good standing, and one 
who has been a member for at least two months, a funeral benefit, 
consisting of $75, if such member be of the first class, and $37.50 if 
of the second class, shall be paid to his widow or legal representatives 
within five days after due notice has been given to the Secretary. 

SEC. 12. In the event of the death of any member of whatever 
grade, suitable flowers shall be procured at a cost not to exceed $5, 
and presented to the relatives or friends of the deceased member by a 
committee composed of the President of the association and Chairman 
of the Investigating Committee. 



400 INDUSTRIAL INSURANCE 

SEC. 13. Anyone detected in obtaining or attempting to obtain 
benefits fraudulently, shall be expelled from the association by the 
Board of Directors. 

SEC. 14. All properties of the association held by officers must 
be turned over to their successors at the expiration of their term of 
office. 

SEC. 15. A quarterly statement of the financial condition of the 
association shall be posted in some prominent place in the works of 
the company. 

ARTICLE VI 

SECTION I. The constitution, by-laws and special rules of this 
association may be amended or repealed at any regular or special 
meeting by a two-thirds vote of all the members present at such 
meeting, provided, however, that two weeks' notice of such intended 
action shall be given to the Secretary and inserted in the call for 
such meeting, and that notice of the meeting shall be posted at least 
one week previous to the meeting in some prominent place in the 
factory. 

RULES 

1. The Secretary may adopt any method for the collection of the 
dues subject to the approval of the Directors. 

2. No person shall speak more than twice or more than ten 
minutes at a time in the discussion of any business which may come 
before the association, except by unanimous consent. 

3. Motions to adjourn without date, to lay on table and the pre- 
vious question shall be decided without debate. 

4. No debate shall be allowed on an appeal from the decision of 
the chair, except an explanation by the chair, and by the member 
making the appeal. 

5. Cushing's Manual shall be the parliamentary guide of the asso- 
ciation, except as provided by the constitution and by-laws. 

6. The order of business at the regular meetings shall be as 
follows : 

(1) Roll call. (5) Unfinished business. 

(2) Reading of minutes. (6) New business. 

(3) Report of officers. (7) Election of officers. 

(4) Report of committees. (8) Adjournment. 

7. The order of business at the Directors' meetings shall be as 
follows : 



APPENDICES 



401 



(1) Roll call. 

(2) Reading of minutes. 

(3) Report of officers. 

(4) Report of committees. 

(5) Application for membership 

and benefits. 



(6) Election of members. 

(7) Unfinished business. 

(8) New business. 

(9) Adjournment. 



APPENDIX K 

CONSTITUTION AND BY-LAWS OF THE SCOTTDALE 
IRON AND STEEL WORKERS' BENEFICIAL ASSOCIA- 
TION, SCOTTDALE, PA. 

Amended May, 1902 

PREAMBLE 

Considering the infirmities of life, and the many accidents which 
happen to the employees of Iron and Steel Works from time to time, 
and knowing from the experience of past ages the utility of well- 
regulated societies, we have formed ourselves into a Beneficial Asso- 
ciation and agree to be bound by the following Constitution and 
By-laws : 

CONSTITUTION 
ARTICLE I 

This Association shall be known as the Scottdale Iron and Steel 
Workers' Beneficial Association, and must be located at Scottdale, Pa. 

ARTICLE II 

The officers of this Association shall consist of a President, Vice- 
President, Secretary, Treasurer, and seven Directors, all of whom shall 
be elected by ballot, to serve for one year. The election shall take 
place at the last meeting in December of each year. Each officer 
elected must receive a majority of the votes cast. 

ARTICLE III 

It shall be the duty of the President to preside at all meetings of 
the Association, appoint all committees, unless otherwise ordered by 
the Association, sign all orders on the Treasurer, call special meet- 
ings at the request of seven members, or when, in his judgment, he 
deems it necessary; to preserve order during the meetings, and to see 
that the Constitution and By-laws are faithfully observed. 

ARTICLE IV 

It shall be the duty of the Vice-President to preside at all meet- 
ings in the absence of the President, and in case of the death, resigna- 
tion or removal of the President, he shall become President for the 
balance of the term. 

402 



APPENDICES 403 

ARTICLE V 

It shall be the duty of the Secretary to keep records of the pro- 
ceedings of all the meetings in a book for that purpose; to keep a 
roll of members; to draw all orders on the Treasurer, when ordered 
by the Directors, and to perform all duties appertaining to his office, 
for which he shall receive a salary of twelve dollars ($12) per annum. 

ARTICLE VI 

The Treasurer shall receive all money belonging to the Association 
and shall deposit same in bank to the credit of the Association. He 
shall pay no money unless on an order granted by the Directors, signed 
by the President and attested by the Secretary. No checks upon the 
banks shall be valid unless signed by the Treasurer and countersigned 
by the President. He shall keep a strict account of all receipts and 
disbursements and shall give security in the sum of one thousand 
dollars ($1,000) for the faithful discharge of his duty, for which he 
shall receive a salary of one hundred and fifty dollars ($150) per 
annum. 

ARTICLE VII 

SECTION i. It shall be the duty of the Board of Directors to 
examine all claims against the Association and to instruct the Secre- 
tary to draw orders on the Treasurer for such claims as they deem 
just. They shall visit all sick or afflicted members. 

SEC. 2. In case the Directors have any doubt as to any claim they 
shall have the power to employ a physician, whose report shall be 
taken and who shall be paid by the Association. If a member shall 
be found to be imposing upon the Association, the benefits shall be 
stopped; he shall be reported at the next meeting, and shall be fined 
or expelled, as a majority of the members present shall determine. 

ARTICLE VIII 

SECTION i. The Association shall meet once every month at the 
call of the President, for the collection of dues and fines, and for the 
transaction of all business appertaining to the Association. 

SEC. 2. Ten members shall constitute a quorum. 

ARTICLE IX 

All persons between the ages of sixteen and forty-eight years who 
have been employed at the Scottdale Works of the American Sheet 
Steel Co. for a period of three (3) months or longer, and who are 
free from bodily disease and at work, are eligible to become members. 



404 INDUSTRIAL INSURANCE 

ARTICLE X 

All applicants for membership must be elected by ballot. Should 
there appear three black balls in the ballot-box the applicant is rejected. 
The depositing of two black balls refers the application to an invest- 
igating committee, which is to investigate and report at the next meet- 
ing. The members depositing the two black balls shall state their 
objections to the said committee, and if objections are sustained by a 
majority of the members present, the applicant is rejected. 

In other cases, where a vote is required, it may be done by calling 
for the yeas and nays or by showing of hands. 

ARTICLE XI 

The Association at the last meeting in December shall elect three 
auditors from the members, to inspect all books, accounts, and docu- 
ments belonging to the Association, and report on the same to the 
Association at the first meeting in January following. 

ARTICLE XII 

The Association shall be supported by each member paying one 
dollar ($i) per month as dues, as long as he remains a member of the 
Association; and no member shall be exempt from the regular pay- 
ment in consequence of sickness or disability. All newly admitted 
members shall pay their entrance money (50 cents) in full, and no 
partial payment shall be taken from any member for his monthly 
contribution. 

ARTICLE XIII 

If any member entitled to receive benefits shall owe the Asso- 
ciation for dues or fines, the amount of such dues or fines shall be 
deducted by the Secretary before benefits are paid. 

ARTICLE XIV 

Any member intending to apply for benefits must make his con- 
dition known to the President or Directors, on or before the sixth 
day of his sickness. Any member not conforming to this rule shall 
not be entitled to benefits until the sixth day after he complies. 

ARTICLE XV 

Any member who has paid his entrance money and membership 
fees for one month and who may be unable to follow his employ- 
ment owing to sickness or accident, providing his inability to work 
lasts more than seven (7) days, shall, after the expiration of these 
seven (7) days, be entitled to receive one dollar ($i) per day (Sun- 



APPENDICES 405 

days excepted), during the continuance of his disability, subject to the 
following limitations : Sick benefits for any one accident or sickness 
shall not be paid for a period exceeding four (4) months, and no 
member who has received benefits for four (4) continuous months 
shall be entitled to benefits for a second accident or a second period 
of sickness until one (i) month has elapsed from the expiration of 
the four (4) months previously mentioned. It is, however, expressly 
provided that all the rights and benefits provided for in Arts. XX, 
XXI, and XXII, which regulate payments in the event of the death 
of a member, his wife or his child, shall continue without interrup- 
tion, except as provided for in Art. XXIV. 

ARTICLE XVI 

Any member who shall be injured by accident to such an extent 
as to disable him at once and permanently from following his usual 
or other employment, shall be entitled to the benefits as provided in 
the previous article, and shall also receive the sum of $2.50 from 
each member, the same to be collected and paid at the expiration of 
the four months, after which he shall cease to be a member. 

ARTICLE XVII 

If a member starts to work after being sick or disabled, and finds, 
after he has worked one day or part thereof, that he is unable to 
continue, he shall forfeit benefits for one day only, but should he 
work more than one day before finding himself unable to continue 
work, he shall receive no benefits until the eighth day after such 
cessation from work, and so on as per Art. XV, provided that no 
member shall receive more than four (4) months benefits for one and 
the same sickness. 

ARTICLE XVIII 

If the sickness of any member be the result of intemperance, 
immoral conduct, or self-abuse in any manner, he shall not be entitled 
to benefits, the same to be determined by the Board of Directors, as 
in Art. VII. 

ARTICLE XIX 

SECTION i. Dues are paid in advance on the first day of each 
calendar month, and arrears as provided for in sec. 3 of this article 
shall be counted from the first day of each calendar month aforesaid. 

SEC. 2. The funds remaining in the Treasury of this Association 
at the expiration of the year shall be divided among the members 
after deducting the entrance fee. 



406 INDUSTRIAL INSURANCE 

SEC. 3. Any member six weeks in arrears for dues shall not be 
entitled to a dividend or benefits. 

SEC. 4. All fines and dues, if any, shall be deducted before a mem- 
ber receives a dividend or benefits. 

SEC. 5. Members shall be entitled to dividends pro rata, according 
to the length of membership. 

ARTICLE XX 

At the death of any member, his wife or nearest of kin shall be 
entitled to fifty dollars ($50) from the general treasury for funeral 
expenses and to an assessment of one and one-half dollars ($1.50) 
levied upon each member. 

ARTICLE XXI 

At the death of the wife of any member, said member shall 
receive fifty dollars ($50) from the general treasury for funeral 
expenses. 

ARTICLE XXII 

At the death of any member's child who is under sixteen years of 
age, or at the death of his father or mother, where said member is a 
single man, and he having been their only support, said member shall be 
entitled to the sum of twenty-five dollars ($25) for funeral expenses. 

ARTICLE XXIII 

In the event of the funds becoming low through sickness or death, 
the Directors shall devise measures for increasing said funds. They 
shall report their recommendations at a meeting of the Association 
called for the special purpose of receiving such report, and the 
methods for increasing the funds decided upon at said special meeting 
shall be binding upon all the members of the Association. 

ARTICLE XXIV 

Any member leaving or having been discharged from the works, 
may retain his membership by the regular payment of his monthly 
dues and assessments until the last day of December, subject to the 
provision of Art. xix, sec. 3. 

ARTICLE XXV 

Any sick or disabled member residing away from the place of 
meeting, claiming benefits, shall send to the Association within one 
week after being taken sick, a written application together with a 
certificate from the attending physician, and shall forward additional 
certificates at least once every two weeks during the time for which 



APPENDICES 407 

benefits are claimed. Directors are empowered to demand a sworn 
statement when they may consider it necessary. 

ARTICLE XXVI 

SECTION I. Any member failing to pay his dues for four (4) 
consecutive months shall cease to be a member, and the Secretary 
shall strike his name from the roll. 

SEC. 2. Any member having received benefits and neglecting to 
give notice to the Directors, declaring himself off the sick list when 
able to resume work, shall be expelled from the Association. 

ARTICLE XXVII 

Any member who shall use disrespectful or abusive language to 
an officer of this Association for discharging the duties pertaining to 
his office shall be expelled. 

ARTICLE XXVIII 

No alteration or amendment shall be made to this Constitution 
unless by a two-thirds vote of the members present at a regular 
meeting and one month's previous notice. 

ARTICLE XXIX 

Each member shall be furnished with a copy of the Constitution 
and By-laws free of charge, but any member destroying or losing the 
first one shall pay for the second. 

ARTICLE XXX 

Any member found drinking intoxicants during the time he is 
receiving benefits (unless said intoxicants shall have been prescribed 
by a physician, in which case they shall be taken at the beneficiary's 
home only), shall be fined two dollars ($2) for each offense, upon due 
proof thereof ; and if any member shall become intoxicated while 
receiving benefits, he shall be fined ten dollars ($10) upon conviction. 

ARTICLE XXXI 

Should any dispute arise in the Association as to the true intent 
and meaning of any section of these By-laws, the Chair shall appoint 
a committee of three (3) to construe the section and to report their 
construction to the Association for approval. 

ARTICLE XXXII 

SECTION i. An officer of this Association may be removed from 
office for misconduct or neglect of duty by a two-thirds vote of the 



408 INDUSTRIAL INSURANCE 

members present at any regular meeting after he shall have been 
served with a copy of the charges preferred against him, one month 
previous to taking action on the said charges. 

SEC. 2. When charges are preferred against an officer, the Board 
of Directors may, if they deem it for the best interests of the Asso- 
ciation, suspend such officer pending the action of the Association. 

SEC. 3. Charges shall be considered as preferred when signed by 
three members and delivered to the President. 

RULES OF ORDER 

1. No member shall be interrupted while speaking, unless it shall 
be to call him to order, or for the purpose of explanation. 

2. If any member while speaking be called to order he shall, at the 
request of the Chair, take his seat until the question of order has 
been determined, when, if permitted, he may proceed. 

3. Each member, when speaking, shall be standing, respectfully 
address the Chair, confine himself to the question under debate, and 
avoid all personal, indecorous or sarcastic language. 

4. If two or more members arise at the same time, the President 
shall decide which is entitled to the floor. 

5. Appeals may be taken from the decision of the Chair, but a 
two-thirds vote is necessary to sustain such appeal. 

6. The President shall be guided by the Congressional Manual in 
all his decisions. 

7. No member shall speak more than twice, or longer than five 
minutes, on the same subject, unless by permission of the Association. 

8. A member, if under the influence of liquor, will not be allowed 
to address the Chair and shall leave the hall at the request of the 
President. Any member refusing to comply with said request shall 
be fined one dollar ($i) for the first offense and expelled for the 
second offense. 

ORDER OF BUSINESS 

1. Calling the meeting to order. 9. Deferred business. 

2. Calling roll of officers. 10. New business. 

3. Reading the minutes. n. Remarks for benefit of Asso- 

4. Report of relief committee. ciation. 

5. Proposition of candidates. 12. Collection of dues. 

6. Balloting for candidates. 13- Repoit of Treasurer. 

7. Communications and bills. 14. Calling roll of members. 

8. Report of business committee. 15. Adjournment. 



APPENDICES 409 

At a regular meeting, held February 21, 1903, Art. XXIV was 
amended to read as follows: "If any member leaves the employ of 
the American Sheet Steel Company at Scottdale, either voluntarily or 
by reason of his being discharged, his membership in the Association 
shall cease from the date of such cessation of employment, and the 
proportion of treasury funds attaching to his membership shall be 
returned to him." 



APPENDIX L 

MUTUAL BENEFIT ASSOCIATION OF THE STUDEBAKER 
BROS. MFG. CO., SOUTH BEND, IND. 

CONSTITUTION AND BY-LAWS 

ARTICLE I NAME 

SECTION i. The Carriage Trimmers' Mutual Benefit Association 
of the Studebaker Bros. Mfg. Co. of South Bend, Ind. 

ARTICLE 2 

SECTION i. The object of this Association shall be the mutual 
relief of members in case of sickness or accident when sufficient to 
unfit them for their daily labors, or when detained from their work 
by quarantine. 

ARTICLE 3 

SECTION i. Membership in this Association shall consist of one 
class, composed of full and half certificates. 

SEC. 2. Any person making application for membership in this 
Association shall pay an entrance fee of one dollar ($i) for a full 
certificate and fifty cents (BOC.) for a half certificate. 

Any member changing from a half certificate to a full certificate 
shall pay a fee of fifty cents (5oc.), and no changes or erasures from 
the roll of membership shall be made without the Secretary being 
duly notified. 

SEC. 3. A member shall not be allowed to hold but one full cer- 
tificate. 

SEC. 4. All applications for membership must be made to the 
secretary in writing, and the person making the application must be 
in good health and have been thirty days prior to the date of making 
such applications. 

SEC. 5. Connections with this Association shall terminate when 
the member has been suspended or expelled by the order of the Board 
of Directors, or when the said member is in arrears for weekly or 
extra assessments. 

ARTICLE 4 

SECTION i. The officers of this Association shall consist of a 
President, first and second Vice-Presidents, and six Directors; the 

410 



APPENDICES 411 

President to act as the chairman of the Board of Directors. 

SEC. 2. The Board of Directors shall meet Friday of each week 
and at such other times as the President shall appoint. 

SEC. 3. All officers shall be elected by ballot at the annual meet- 
ing and shall hold office one year, or until their successors have been 
elected. 

ARTICLE 5 

SECTION i. The President shall preside at all meetings of the 
Association and Board of Directors and he shall cast a deciding vote. 
He shall call special meetings at the request of a majority of the 
Board of Directors, or at the written request of ten members of the 
Association; he shall sign all orders on the Treasurer for money or 
supplies. 

SEC. 2. Upon the notice of the Secretary of the sickness of a 
member, the President shall at once appoint a visiting committee of 
three members, whose duty it shall be to visit the members in question 
and report to the Secretary as soon as possible. The President shall 
enforce all rules of the Association and perform such other duties 
as may be required of him. 

SEC. 3. The Vice-President shall perform the duties of Presi- 
dent in the absence of the latter. 

SEC. 4. The Secretary may adopt any method for the collection 
of assessments as he may deem best, subject to the approval of the 
Board of Directors. He shall turn over all moneys to the Treasurer, 
and shall keep all records, blank forms and other printed matter, issue 
all notices of special meetings and perform such other duties as the 
office may require of him. He shall give a bond of twenty-five dollars 
($25) subject to the approval of the Board of Directors and shall 
receive two dollars ($2) per year for his services. 

SEC. 5. The Treasurer shall receive and hold all moneys belong- 
ing to the Association, and shall pay it out only upon orders signed 
by the President and not less than four Directors, he shall invest the 
funds of the Association subject to the approval of Directors and 
shall make a quarterly report to the Board of Directors. He shall 
give a bond of five hundred dollars ($500) subject to the approval 
of the Board of Directors, and shall receive one dollar ($i) per 
year for his services. 

SEC. 6. The Directors with the President shall have general super- 
vision of the affairs of the Association, they with the President shall 
decide who are entitled to relief and shall audit the books of the 



412 INDUSTRIAL INSURANCE 

Association every six months or at any time they may deem it best. 
They with the President shall have the power to levy an assessment 
on the members of the Association to meet the contingencies of exces- 
sive demands for relief, provided such assessment shall not exceed 
fifty cents (5oc.) for holders of a full certificate and twenty-five 
cents (25c.) for holders of a half certificate. They shall hear and 
decide all questions in dispute concerning members of this Association. 

SEC. 7. Any member having accepted office in this Association 
will be expected to serve the full term or pay one dollar ($i) on 
vacating his office; unless, on his excuse being accepted by the Board 
of Directors, he be allowed to retire from office. 

SEC. 8. All vacancies in the offices of this Association shall be 
filled by ballot at a special meeting called for that purpose and such 
meeting shall be called within four days after an office has become 
vacant. 

ARTICLE 6 

SECTION i. The regular meeting of this Association shall be held 
annually on the second Monday in July. 

SEC. 2. Ten members shall constitute a quorum for the transac- 
tion of business and no business shall be transacted unless a quorum 
be present. 

ARTICLE 7 

SECTION I. The funds of this Association shall consist of entrance 
fees, assessments, extra assessments, and voluntary contributions. 

SEC. 2. The weekly assessments for full certificates shall be ten 
cents and for half certificates shall be five cents per week, to be paid 
in advance to the Secretary every two weeks, on Saturday following 
pay day. 

SEC. 3. Arrears of assessments cannot be received after a lapse 
of four weeks except by order of the Board of Directors and after 
the payment of arrears the member becomes a member in good 
standing. 

SEC. 4. Whenever the funds of the Association shall reach the 
sum of five hundred dollars the Board of Directors shall cause the 
weekly assessment to be suspended until the sum in the treasury falls 
below three hundred dollars, when the Board .of Directors shall cause 
the weekly assessment to be resumed. In the event of the fund falling 
below two hundred, dollars the Board of Directors shall cause the 
assessment to be doubled until the sum of two hundred dollars is 
again reached. 



APPENDICES 413 

SEC. 5. The Board of Directors shall have the power to change 
the maximum fund as the increase in the membership may demand. 

ARTICLE 8 

SECTION i. A member to be entitled to benefits must be a mem- 
ber for thirty days before date of sickness. 

SEC. 2. Any member of the Association unable to attend to his 
duties must notify the President or Secretary at once of date and 
cause of sickness or disability and after the expiration of six days from 
date of such notice the member shall be entitled to receive from the 
Association, if he be a holder of a full certificate, the sum of eighty- 
three and one-third cents per day; and if he be a holder of a half cer- 
tificate he shall receive the sum of forty-one and two-thirds cents per 
day, for every day of his sickness or disability, Sundays and legal 
holidays excepted, for a period not exceeding twelve weeks or seventy- 
two days. 

SEC. 3. Any member having drawn benefits for the full term of 
twelve weeks or seventy-two days shall not be entitled to further 
benefits for sickness or disability until after the expiration of six 
months from date of notification of sickness. 

SEC. 4. Any member being sick for two weeks or more shall 
receive benefits from date of sickness. 

SEC. 5. A visiting committee shall be appointed by the President 
in writing, whose duty it shall be to visit any sick member. 

SEC. 6. The visiting committee shall make a report in writing 
to the President or Secretary at once and said report shall be signed 
by each member of the committee. 

SEC. 7. The reports of visiting committees shall be confidential 
in the strictest sense of the word and the Secretary shall keep all 
such reports on file. 

SEC. 8. For the first week of any sickness or disability the case 
shall be visited by the committee and reported on as usual, but for any 
week or part of week thereafter the member to be entitled to benefits 
must provide and forward to the Secretary in time for the weekly 
meeting of the Board of Directors a medical certificate, otherwise the 
case for that week will not be considered unless the Board of 
Directors shall decide otherwise. 

SEC. 9. Any member in case of sickness or disability while 
absent from city must, in order to receive benefits, send a physician's 
certificate weekly so the case can be considered by the Board of 



414 INDUSTRIAL INSURANCE 

Directors at their weekly meeting; if a member should fail to do so 
he shall not be entitled to benefits. 

SEC. 10. The Board of Directors may employ some competent 
physician to visit a sick member should they deem it necessary, to 
examine and report the facts in the case of sickness or disability 
referred to them. 

SEC ii. Any member being discharged or dropped from the pay- 
roll of the Studebaker Bros. Mfg. Co. Trimming Department, may 
retain membership as long as he or she is in the city of South Bend, 
Ind., and does not engage in any occupation that is any more hazard- 
ous than their present occupation. 

SEC. 12. Members appointed to serve on visiting committee must 
do so unless excused by officer appointing them. All members refus- 
ing to serve shall lay themselves liable to a fine of fifty cents for the 
first offense and one dollar for the second offense. If he refuses to 
pay such fines he may be suspended from all benefits for such a period 
as the Board of Directors may decide or he may be expelled from 
the Association if the Board of Directors so order. 

SEC. 13. No benefits shall be allowed for chronic cases cases 
likely to re-occur from time to time. The history of the case with or 
without a medical certificate shall be evidence enough for the Board 
of Directors to determine the merits of the case. 

SEC. 14. No benefits shall be allowed for any sickness or disa- 
bility arising from intemperance or criminal or immoral acts on the 
part of any member. 

SEC. 15. If any member shall be guilty of frequenting saloons or 
any disreputable places or found intoxicated while securing benefits 
from this Association he may be suspended from benefits or expelled 
from the Association if the Board of Directors so order. 

SEC. 16. Members expelled from this Association cannot be again 
re-instated. 

SEC. 17. Members dropped from the register for arrears may be 
re-instated only as new members. 

SEC. 18. Members feigning sickness or disability or otherwise 
attempting to obtain benefits from this Association by fraudulent 
means may be tried by the Board of Directors sitting as a court and 
this court shall have the power, if the attempt is proven, to inflict the 
penalty of suspension from benefits or expulsion from the Association. 



APPENDICES 415 

ARTICLE Q 

SECTION i. All questions in dispute between the Board of Direct- 
ors and the members of this Association may be settled by arbitration. 

SEC. 2. The Board of Arbitration shall consist of three men, not 
members of this Association. 

SEC. 3. Any member wishing to appeal from the decision of the 
Board of Directors shall state his case, in person, if possible, or in 
writing, to the President or Secretary. 

SEC. 4. When an appeal is taken from the Board of Directors, 
the President shall appoint one arbitrator, the aggrieved one, and 
these two only shall appoint the third. 

SEC. 5. The Board of Directors shall furnish the Board of 
Arbitration with a copy of their proceedings in the case in question. 

SEC. 6. The member taking an appeal shall furnish the Board 
of Arbitrators with a full statement of his case in writing and may 
appear in person or by council. 

SEC. 7. All decision of the Board of Arbitrators shall be con- 
sidered final. 

ARTICLE 10 

SECTION i. The Constitution and By-laws can be changed or 
amended only by a two-third majority vote of all members present 
at any regular or called meeting. 

RULES 
Cushing*s Manual shall be used in governing all meetings. 



APPENDIX M 

THE UNIVERSITY OF CHICAGO PRESS MUTUAL 
BENEFIT ASSOCIATION 

CONSTITUTION 

ARTICLE I 

SECTION i. This association shall be known as 'The University 
of Chicago Press Mutual Benefit Association," and shall not have 
power to dissolve itself while there are ten dissenting members. 

SEC. 2. The object of this association is to establish a fund for 
the payment of benefits to sick or quarantined members, and a funeral 
benefit to the family of a deceased member. 

SEC. 3. Membership in this association shall be limited to the 
employees of the University of Chicago Press earning seven dollars or 
more per week. 

ARTICLE II 

SECTION i. The elective officers of this association shall consist 
of a President, a Vice-President, a Secretary, a Treasurer, a Board 
of Directors consisting of five members, one of whom shall be the 
President, ex-officio, and a Committee on Membership, consisting of 
three members, and shall hold office for one year and until their suc- 
cessors are elected and have qualified. Any vacancy occurring shall 
be temporarily filled by the Board of Directors, to take effect until 
the next stated meeting; at which time an election shall be held to 
permanently fill the vacancy. 

ARTICLE III 

SECTION i. President: It shall be the duty of the President to 
preside at all meetings of the association and to enforce order and a 
strict observance of the constitution and by-laws; indorse all orders 
of the Relief Committee; appoint all special and standing committees, 
including a Relief Committee, which shall be appointed for each case, 
and shall consist of three members; fill all vacancies unless herein 
otherwise provided; and transact such other business as may by 
custom appertain to his office. All reports shall be made to him. 
Applications for sick benefits shall be addressed to him, or, in his 
absence, to the Vice-President, and such application shall be forth- 

416 



APPENDICES 417 

with referred to a Relief Committee, whose duty it shall be to visit 
the applicant and report upon his case at once. The President shall, 
ex officio, be a member of the Board of Directors and of each standing 
committee. 

SEC. 2. V ice-President: The Vice-President shall, in the absence 
of the President, perform the duties and possess all the powers of the 
President. 

SEC. 3. Secretary: The Secretary shall receive all moneys paid 
to the association and turn them over to the Treasurer, taking his 
receipt therefor. At the January meeting he shall make a detailed 
statement of the receipts and disbursements of the association and a 
report of all members in arrears for dues or otherwise. It shall also 
be his duty to record the proceedings of the association in a book to 
be especially provided for that purpose, to read all papers addressed to 
it, and notify members of all special meetings. The books kept by 
him shall at all times be open to inspection by the Board of Directors. 
At the end of his term of office he shall surrender all books and papers 
belonging to the association to his successor. He shall receive all 
applications for membership, keeping a record of the same; and shall 
turn such applications over to the Committee on Membership. All 
necessary expenses incurred by him in the discharge of his official 
duties shall be defrayed by the association. He shall be allowed such 
compensation for his services as may be prescribed by the association, 
which, however, shall at no time exceed 10 per cent, of the current 
income of the association. 

SEC. 4. Treasurer: The Treasurer shall be the custodian of all 
moneys belonging to this association. At the January meeting and 
also at the end of his term of office he shall make a report of all 
moneys received and disbursed by him, and the amount of all funds 
on hand, loaned, or invested. He shall deposit all funds of the asso- 
ciation in a bank to be designated by the Board of Directors, to the 
credit of the association, and all checks against such deposit shall be 
drawn on the order of the Board of Directors through the Secretary, 
and signed by himself as Treasurer, and countersigned by the Presi- 
dent. He shall give a surety bond to the association in the sum of 
$1,000, acceptable to the Board of Directors, the cost of such bond 
to be defrayed by the association. 

SEC. 5. Board of Directors: In the Board of Directors shall be 
vested authority to execute all the by-laws and orders of the associa- 
tion, provided, however, that in all cases appeal may be made to the 



4i8 INDUSTRIAL INSURANCE 

association, which shall be promptly called to meet in special meeting 
as provided in Article V, sec. 2, of this constitution. Such appeal 
shall be in writing, addressed to the Board of Directors and may be 
made by any member. The Board shall have no option in such case, 
but shall forthwith notify the President, or, in his absence, the Vice- 
President, of such appeal. The Board of Directors shall receive the 
reports of the Secretary and of the Treasurer and certify to the cor- 
rectness of the same. The Board of Directors shall have the power 
to levy an assessment on all members of the association, not exceed- 
ing double the weekly dues paid, except in case of the payment of a 
death benefit, the amount of the assessment for which shall be regu- 
lated by the by-laws, at any time the needs of the association may 
render such acts advisable or necessary; provided, however, that not 
more than one assessment shall be levied in any one week. 

SEC. 6. Committee on Membership: Application for membership 
in this association shall be acted on by the Committee on Membership. 

ARTICLE IV 

SECTION i. The election of officers of this association shall be 
held at the regular January meeting by ballot. 

SEC. 2. The presiding officer shall appoint two members as tellers 
of election, who shall receive and count the votes in the presence of 
the Secretary, who shall announce the result to the presiding officer, 
who in turn shall declare to the association the names of the successful 
candidates. 

SEC. 3. A candidate must receive a majority of the votes cast. In 
the case of the Board of Directors the four candidates receiving the 
highest number of votes shall be declared elected. 

ARTICLE V 

SECTION i. The stated meetings of this association shall be held 
the first Monday in January, April, July, and October. 

SEC. 2. Special meetings may be called by the President on his 
own motion, and shall be called by him on the request of five members 
in writing, or for the purpose of deciding appeals, as provided in 
Article III, sec. 5 hereof. Such meetings shall be held on not less 
than twenty-four hours' notice, to be posted in some public place 
accessible to the members of the association. 

SEC. 3. On the death of a member the President shall immediately 
call a meeting to make necessary arrangements to attend the funeral 
of the deceased. 



APPENDICES 419 

SEC. 4. Eight members, one of whom shall be either the Presi- 
dent, the Vice-President, or one of the Directors, shall constitute a 
quorum for the transaction of business. 

ARTICLE VI 

SECTION i. This constitution may be amended at any regular 
meeting of not less than ten members by a unanimous vote, or by a 
two-thirds vote if one month's previous notice in writing of the 
section intended to be amended is given. Such notice shall be addressed 
and delivered to the Secretary and a copy thereof shall by him be 
posted in some public place as prescribed by the by-laws. 

BY-LAWS 

ARTICLE I 

SEC. i. All applications for membership in this association shall 
be made in writing and delivered to the Secretary, who shall refer the 
same to the Committee on Membership. 

ARTICLE II 

SECTION I. Members of this association shall be divided into two 
classes and shall pay monthly dues in advance to the association on the 
following basis : 

Class A : Those earning $12 or more per week, 10 cents for each 
week. 

Class B: Those earning under $12 per week, 5 cents for each 
week. 

SEC. 2. Dues shall be deducted from the wages of members on the 
first pay day in each month by the cashier of the University Press ; 
and, in case of an assessment, the Secretary shall notify the cashier 
of the additional amount to be deducted over and above the dues, 
which shall be deducted from the wages on the pay day next succeed- 
ing such notice. Any member being in arrears for dues for one 
month, shall be considered as no longer in good standing. 

ARTICLE III 

SECTION i. Any member in good standing shall, subject to the pro- 
visions of this article, during sickness or quarantine, be paid benefits 
as follows: Members in Class A, $8 per week; members in Class 
B, $4 per week; provided, however, that no sick benefits shall be 
paid to any member during sickness due to or resulting from intoxi- 
cation, or the use of narcotics, or any unlawful or immoral act. 



420 INDUSTRIAL INSURANCE 

SEC. 2. No member shall be entitled to benefits under the pre- 
ceding section unless he shall be sick and incapacitated from work 
for one week or more, in which case benefits shall be paid for the 
entire period of such sickners, not to exceed a total of six weeks, 
provided, however, that notice of such sickness or incapacity has been 
given in accordance with the provisions of the following section. In 
no case, Jiowever, shall more than twelve weeks' benefit be paid to 
any one member in any calendar year. 

Provided, that a member who has drawn twelve weeks' benefit for 
the calendar year shall not be eligible for future benefits until after 
a doctor's certificate of good health has been received. 

If a member carries other sick and accident insurance, making a 
total indemnity in excess of his regular wages, the association will 
pay only such portion of the benefit herein provided as his regular 
wages bear to the total indemnity. 

SEC. 3. Application for sick benefits shall be made to the Presi- 
dent, who shall forthwith appoint a Relief Committee of three mem- 
bers, whose duty it shall be to visit the applicant and report his 
condition weekly to the Secretary who shall keep a record of such 
reports. On the recommendation in writing by such Relief Com- 
mittee and approval by the President it shall be the duty of the 
Secretary to draw an order on the Treasurer for the amount of sick 
benefits as provided in Article III, sec. i, as the same shall become 
due and payable, and the Treasurer shall thereupon pay the same to 
the member entitled thereto, or his order. 

SEC. 4. In every case when it is possible the Relief Committee, 
before recommending the payment of benefits, shall require and obtain 
a doctor's certificate that the 'applicant is unable to work, and shall 
file the same with their report. 

SEC. 5. In case of the inability of the Relief Committee to decide 
as to whether an applicant for benefits is entitled thereto, the Presi- 
dent shall immediately call a special meeting of the members of the 
association whose decision shall be final. 

SEC. 6. No one shall be entitled to benefits unless he shall have 
been a member of this association in good health for one month; 
except in case of accident, in which case he shall be entitled to bene- 
fits from the date of such accident, subject to the other provisions of 
these by-laws. 

SEC. 7. An appeal may be taken from any decision of the Relief 
Committee. Such appeal shall be decided by a secret ballot, and a 



APPENDICES 421 

two-thirds vote of those present and voting shall be required to reverse 
such decision. 

SEC. 8. Members incapacitated from work may leave the city on 
receiving the sanction of the full Relief Committee. In such a case 
a doctor's certificate as to such member's condition shall be required 
before paying sick benefits for each week. 

SEC. 9. In addition to the sick benefits herein provided for, the 
association shall pay the sum of $50 to the immediate family of any 
member dying while in good standing, on proof of such death being 
furnished, which sum shall be devoted toward defraying the expenses 
of the funeral, and shall be raised by means of a pro rata emergency 
assessment. 

ARTICLE IV 

SECTION i. The Treasurer of the association shall open accounts 
for two separate funds, to wit: the "general fund," and the "emer- 
gency fund." 

SEC. 2. To the general fund shall be credited the weekly dues 
as paid. 

To the emergency fund shall be credited all donations to the 
association. 

SEC. 3. All benefits shall be paid solely from the general fund 
until the same is exhausted. In such a case resort may then be had 
to the emergency fund. 

ARTICLE v 

SECTION i. Loans may be made to members in good standing out 
of any moneys available for such purpose in the general fund if in 
the opinion of the Board of Directors a sufficient emergency exists on 
the part of the applicant to make such loan necessary. But no loan 
shall be made for a sum exceeding $20 to any one member. For a 
loan not exceeding $5 the borrower shall give an order for the 
amount on the cashier of the University Press payable on demand 
out of his salary. For a loan exceeding $5 a satisfactory indorser 
shall be furnished, in addition to giving the order as aforesaid. All 
loans must be repaid within four weeks. Interest shall be charged at 
the rate determined by the Board of Directors, and shall be payable 
in advance. No loan of less than $i shall be made. Application for 
loans shall be made to the Secretary. 

SEC. 2. All loans outstanding must be paid on or before the first 
Monday in January and July. Any borrower failing to make such 



422 INDUSTRIAL INSURANCE 

payment shall be taken to be no longer in good standing and shall 
thereby forfeit all right to the payment of any benefits. 

SEC. 3. Any member owing any borrowed money to the associa- 
tion at the time he is taken sick or is disabled by accident shall pay 
interest on all over $5, and reduce the principal of the debt $i 
each week until the sum of such loan is $5, when the running of 
interest thereon shall cease until recovery and return to work. The 
Treasurer shall deduct all interest due each week on such a loan, 
together with the $i, as aforesaid, from any benefit which may be 
payable to such borrower. 

SEC. 4. Any member in arrears for interest or principal for one 
month shall be taken to be as no longer in good standing, and shall 
forfeit all rights to benefits as provided in these by-laws until restored 
to good standing. 

ARTICLE VI 

SECTION I. In case of any member desiring to withdraw from 
the association, he shall give notice thereof in writing to the Secretary. 

SEC. 2. No member expelled or. suspended for any cause shall be 
readmitted a member of this association except upon a unanimous vote 
of all the members of the association present at the meeting; and then 
only upon payment of all sums due by him at the time of such 
expulsion or suspension. 

Provided, that every member drawing benefits for twelve weeks 
in any one year shall stand suspended until reinstated by action of the 
Committee on Membership. 

SEC. 3. Any member of the association may be expelled or sus- 
pended at any stated or special meeting by a majority vote of all 
members present, provided, however, that charges have been preferred 
at least one week previous to such act, by delivering a copy of the 
same in writing to the member himself and to the Secretary. 

ARTICLE VII 

SECTION I. These by-laws may be amended at any meeting of 
not less than ten members by a unanimous vote, or by a two-thirds 
vote if one week's previous notice in writing of the section intended 
to be amended is given. Such notice shall be addressed and delivered 
to the Secretary, and a copy thereof shall by him be posted in some 
public place on each floor of the Press building. 



APPENDIX N 

EXTRACTS FROM THE THIRTEENTH BIENNIAL REPORT 
OF THE BUREAU OF LABOR AND INDUSTRIAL 
STATISTICS (1908) 

J. D. BECK, Commissioner ; M. O. LORENZ, Deputy 

INDUSTRIAL ACCIDENTS AND EMPLOYERS' LIABILITY IN WISCONSIN 

What would be the cost if we continued with the law of negli- 
gence? Employers' liability insurance costs now in Wisconsin from 
12 cents per $100 of wages in knitting mills to at least $9 in some 
building operations an average of 50 or 60 cents. But it is very 
probable that this expense would be increased in the near future by 
weakening the defense of the employer in the courts. In the railroad 
industry, the fellow-servant doctrine has been abolished in this state 
and the doctrine of contributory negligence has been seriously modi- 
fied. Similar modifications are practically inevitable for other hazard- 
our industries if the present system of liability is retained. That 
means that the liability companies will charge more and more for a 
liability policy. But in addition where there is no legal liability, 
employers are appealed to for charity. 

One absurdity of our present law is that it says : A railroad brake- 
man cannot wholly be barred from compensation by the defense of 
contributory negligence, but a structural steel worker or a worker in 
a sewer (both in very hazydous employments) can be debarred from 
compensation by that defense. The reason for this is that the acci- 
dents in the railroad industry were the first to attract attention. But 
that other classes of accidents are now relatively more important, is 
shown by the following analysis of Wisconsin Supreme Court cases 
involving claims by injured workmen against their employers. Before 
1890, three-fourths were railway cases; since 1890, less than one- 
fourth are railway cases. 





STEAM RAILWAY 
CASES 


OTHER INDUSTRIAL 
CASES 


TOTAL 


Number 


Per cent. 


Number 


Per cent. 


Number 


Per cent. 


Before 1890 


Si 
66 


77-2 
27.4 


15 
175 


22.8 

72.6 


66 

241 


100 
100 






117 


38.1 


190 


61.9 


307 


IOO 





423 



424 INDUSTRIAL INSURANCE 

What could be paid with his money if distributed on the insur- 
ance principle? The cost of the present system would be sufficient 
to inaugurate a general system of compensation if properly adminis- 
tered. The following estimate, which has been explained in chap, iii, 
is made on the basis of Wisconsin accident statistics : 

To pay regardless of negligence for each fatal industrial accident 
three times the annual earnings, and for non-fatal accidents one-half 
wages during disablement after the second week up to one year, 
together with an additional payment of $500, or less, according to the 
degree of the injury, to those permanently injured, and for all cases 
first medical aid, would cost at a maximum as follows for manu- 
facturing establishments reported in the federal Census of 7905 for 
Wisconsin. 

Fatal accidents at three years' earnings $164,290.80 

Non-fatal during total disability for one year after the first two 

weeks at one-half wages 83,880.37 

Permanent disabilty additional 150,125.00 

Medical fees, first aid at $500 per case 20,525.00 

Administrative (15 per cent.) 73,909.62 



Total $492,730.79 

This would be approximately 68.9 cents per $100 of the wages bill 
or $3.25 per man per annum, employed, on an average. In some 
industries it would be less and in some more. If these same 
manufacturers had been insured at existing employers' liability rates, 
the cost would have been about $416,204.61, which is 58 cents per 
$100 of wages or $2.75 per man per annum. That this last estimate 
is a reasonable one, appears from the following (explained in detail 
in chap, iii) : The Bureau received reports from 540 establishments 
regarding their expenses on account of industrial accidents and wages 
in the year 1906. This result shows an average expense of from 53 
to 58 cents per $100 of wages on the wages bill, and from $2.50 to 
$2.80 per man employed. The difference between the two estimates 
of $492,730 and $416,204 is not enough to prevent the adoption of a 
system of workmen's compensation on the ground of expense. 

Moderate compulsory liability or a voluntary co-operative insur- 
ance fund? (a) Compulsory liability. The preceding suggestions 
would be substantially carried out by the English system with 
the scale of benefits paid under the act of 1897. This would mean 



APPENDICES 425 

that little further governmental machinery would be necessary. The 
law would make employers in certain occupations liable for a given 
amount of damages in case of accidents to their employees without 
regard to ordinary negligence or assumption of risk, and employers 
would insure themselves as at present with employers' liability insur- 
ance companies. There are two objections to this plan: first, as has 
already been suggested, it may be unconstitutional, and second, it 
would retain the wasteful system of employers' liability insurance 
under competitive conditions. 

b) A voluntary co-operative insurance fund. Another plan for 
embodying the preceding suggestions would be as follows: Employ- 
ers and employees would be allowed to make a contract whereby the 
employer would be relieved of the liability for damage suits on 
account of industrial accidents to his employees on condition that he 
paid into a fund, to be managed by the State Insurance Commissioner, 
or some special commission, an annual payment about equal to the 
present cost of employers' liability insurance in his industry. From 
this fund workingmen who had entered the scheme would receive a 
benefit (specified by law) in case of injury regardless of negligence 
(except in case of gross misconduct) without making any contribution 
themselves. 

The state could probably not guarantee the fund without an 
amendment to the constitution. In other respects such a solution of 
the problem would be similar to the Illinois Commission plan, 
explained in the appendix. It would, however, have some advantages 
over that plan. The expenses of administration would probably be 
less because part of the administrative work could be borne by 
the state. Considering the public advantages of such a system, the 
state could very properly contribute something in this way indirectly. 
It would give the state more complete information regarding acci- 
dents than if it simply asked private companies for reports. Direct 
state supervision of this kind would inspire confidence and would 
guarantee fairness in the rates charged. . . . 

The conduct of liability insurance by private companies has 
proved excessively wasteful. As explained in chap, iii, they charge 
about two and one-half times as much as they pay out in losses. The 
plan here outlined could certainly be managed for much less than that. 
The administrative expenses of the German accident insurance system, 
as already stated, are now 13.50 per cent, of total expenditure, and 
probably will be less in the future; and the experience of Wisconsin 



426 INDUSTRIAL INSURANCE 

local fire mutuals indicates that the administrative expenses of the 
fund need not be more than 15 or 20 per cent. 

To promote economy and speed in settlement, use might be made 
of the device employed by the Ocean and Accident Guarantee Corpo- 
ration, elsewhere fully explained, whereby the employer might settle 
all small cases immediately according to his own interpretation of the 
law, and be reimbursed from the insurance fund up to 80 or 90 per 
cent, of what he paid out. 

How the workman may be encouraged to provide for himself. 
It might be made a part of the conditions of the organization of 
the mutual insurance fund mentioned in the preceding section, that 
workmen who paid additional premiums (either directly or by having 
them deducted from their wages) into this fund, should receive 
additional benefits. 

Or, it might be advisable to separate these two features, and 
organize a system of workingmen's accident insurance on the plan 
now being tried for life insurance and annuities in Massachusetts, 
through the efforts of Mr. Louis D. Brandeis. 

By an Act of the Massachusetts legislature in 1907, savings banks 
are permitted to establish departments for the issue of life insurance. 
These departments (two of which having been organized at the present 
time) are to be conducted at a minimum expense, no solicitors being 
allowed. The waste in industrial insurance as now conducted by 
private companies is very great. It is the thought of this Massa- 
chusetts plan to supply good insurance at a low price to those who 
want it. It is only when such an opportunity is offered that one can 
reasonably adopt the principle of "let each man look out for himself." 

Similarly the attitude, frequently expressed, "Let each man buy 
his own accident insurance in the same way that he buys his fire 
insurance" will only then be a reasonable one when the workingman is 
given an opportunity to buy this article without feeling that he is 
being robbed. 

Conclusion. The foregoing considerations make inevitable the 
conclusion that the existing method of settling the claims arising out 
of accidents to workingmen while at work can be greatly improved. 
In some manner we should introduce the idea of insurance, which 
practically disregards the idea of negligence. Perhaps it would be best 
first to test the constitutionality of making all employers liable to 
moderate benefits, amounting on an average to about as much as they 
would pay under the present system, in all cases of accidents, and 



APPENDICES 427 

then releasing them from the liability to damage suits when these 
benefits have been paid. But if this is inadvisable, it would be 
desirable to have permissive legislation, as outlined in preceding sec- 
tions, combining the idea of encouraging co-operation between 
employers and employees, state supervision of insurance funds to 
guarantee fairness, and the opportunity for workingmen to provide 
adequately for themselves. 

In fact, a number of bills might be passed, each capable of stand- 
ing alone, yet supplementing the others. Such bills would be in sub- 
stance as follows: (i) Extend the law regarding the railway industry 
given on p. 84 (chap. 254, Laws of 1907) to other employments; 
(2) give the workmen the option of proceeding under the law of 
negligence or under a law of compulsory liability that disregards 
negligence, but not under both; (3) provide for a voluntary co-opera- 
tive insurance fund as above outlined ; (4) require complete reports 
from employers' liability insurance companies. The combining and 
choosing of these plans is the work of the legislator. 



APPENDIX O 
LAWS OF MASSACHUSETTS, 1908, CHAPTER 489 

An Act to Authorize and to Provide for the Approval of Plans of 
Compensation for Injured Employees. 

BE IT ENACTED, etc., ES f ollowS : 

Section i. Any employer of labor may submit to the State Board 
of Conciliation and Arbitration a plan of compensation for employees 
in his employ, providing for payments to said employees in the event 
of injury in the course of their employment, based upon a certain 
percentage of the average earnings of such employees, and without 
reference to legal liability under the common law of the employers' 
liability act. After examination of such plan of compensation, and a 
public hearing thereon after public notice thereof, the board of con- 
ciliation and arbitration may, if it considers the same fair and just 
to the employees, give its approval thereof by certificate to be 
attached to such plan. 

Sec. 2. After obtaining the approval of a plan of compensation 
as set forth in the foregoing section, it shall be lawful for the 
employer to enter into a contract with his employees by which such 
employees shall release the employer from liability in case of injury 
in the course of said employment and accept in lieu thereof the com- 
pensation provided in said plan of compensation. 

Sec. 3. Either parent of any minor employee or the guardian of 
such minor may agree to said plan of compensation in behalf of the 
minor. Such agreement shall be in writing signed by the employee, 
or, in case of a minor employee, by either parent or guardian, in the 
presence of two witnesses, of whom one shall be an employee at the 
time of such signature. 

Sec. 4. No employer shall require as a condition of employment 
that any employee shall assent to any plan of compensation or in any 
way waive his legal right to recover damages for an injury outside 
the provisions of such plan. 

Sec. 5. No contract under such plan of compensation shall be 
binding for more than one year from the date thereof. 

428 



APPENDICES 429 

Sec. 6. So much of section sixteen of chapter one hundred and 
six of the Revised Laws as is inconsistent herewith is hereby repealed. 1 

Sec. 7. This act shall take effect upon its passage. (Approved 
May 5, 1908.) 

This law embodies one of the central principles of the bill pro- 
posed by the Illinois Industrial Insurance Commission in 1907, that 
of release of employers from liability when they have insured their 
employees in a satisfactory scheme. But in this law the terms are 
decided by an administrative board, while in the Illinois bill the 
legislature itself was asked to determine the basis. There are other 
differences. 

1 Sec. 1 6 reads as follows: "No person shall, by a special contract 
with his employees, exempt himself from liability which he may be under 
to them in their employment and resulting from the negligence of the 
employer or of a person in his employ." 




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